if the car drives faultlessly when the needle sticks then you need new clocks!
the light could be down to the level sensor, the control wrelay, the temp sensor, the wiring or the clocks.
take the level sensor off and bridge the pins, if the flashing stops its the level sensor. you could try unscrewing it from the tank and cleanign the contacts. if that doesnt stop the flashing disconnect the dash temp sensor, its the red/yel wire to a single pin sensor on one of the coolant flanges on the head. if light stops then you probably need a new sensor. if that doesnt help pull the level sensor relay, #42 or 43. if that stops it then the relay or level sensor wiring is to blame. if it STILL doesnt stop then its the dash!