Hello kurte! You've given me some things to think about and try. I'll go down your list in the order attempted.
To try to see if a Transmitter and receiver will connect to each other, sometimes it is easier if only the +5v and GND are connected. That keeps any issues of software from interfering.
I have had some receiver/Atmel processors, whose processor built-in pull-up resistor on the DAT line was not sufficient. I had to add an external one, from +5v to DAT. I did this inside the receiver case (in the back side of the connector...)
I believe that I have the appropriate resistor (10k Ohmz) and will implement one by the weekend. If I should use a different value, please let me know.
3) If above works. I have found (on multiple processors). If I have code running that is constantly asking the PS2 receiver for data, it does not leave any time for the receiver to talk to the transmitter and will be in constant blinks. Solved by adding more time between calls.
I tried gradually bumping up the time between calls all the way up to 1 full second without the resistor just to see if that would work. Needless to say, I am still here typing.
4) You did not mention, what code you are using to talk to PS2. I was not using the code that was later added to webbotlib. Not sure if you are or are not... Not sure what init it uses. Sometimes the init code/timing can be temperamental....
I am using webbotlib v2.08.