Right, the flashing light is just to tell you the level is low, it wont tell you if the mixture is incorrect. The sender is inside the tank where you've been topping up the coolant, if the light is still flashing when the level is up to max then it means the sender or the wiring to it is shafted.
First thing to do is remove the electrical plug from the tank and bridge the 2 pins then turn on the engine, if the coolant light is still flashing then your problem lies elsewhere. If the light goes out then you know there is a problem with the coolant sensor, or your coolant level is low
If you have the older squareish shaped tank, then you can unscrew the sender from the top and check the pins, if they're filthy give em a good clean and see if that helps. If its the newer ball shaped tank then the sender is part of the tank and cannot be replaced.
If you have some nasty white oily stuff on the bottom of the header tank then I suspect your oil cooler has gone, and this has gunked up the contacts on the level sender. 1st thing to do is either replace the oil cooler or bypass it for now, then clean out the coolant system.
Completly drain the coolant system, unhook as many pipes as you can and flush them through with a hose pipe till the water runs clear. Then refill the system with plain water and then chuck a cupfull of bio washing powder in the tank, then run the car for 5 mins. While its running squeeze all the pipes & rev the engine now & again, then leave it to cool. Drain the system, flush it all out again & repeat till you are satisfied all the oil is gone from the system. Then fill the system with a 50/50 mix of water and antifreeze. I always use G12 from VW or GSF, but the pink halfords stuff should be ok.
If the header tank is really dirty, try leaving it in a bucket of water with some bleach in it overnight. Then flush it all out with a hosepipe. If that doesn't clean it up, you'll probably have to buy a new one!
