A: This is normal if using the guide above. After experimenting, it seems that the health light indicates that the MediaSmart server cannot detect a valid Windows Home Server installation. I came to the conclusion after using the Recovery Disk (comes with the HP WHS server) to reinstall Windows Home Server onto the hard drive. The blinking stopped after a reboot with Windows, but it came back after I reinstalled Ubuntu onto the same hard drive.
Q: ''The MediaSmart server is falshing red and blue when booting''
A: I have not found this to be of any consequence, once fully booted the server will just flash the blue health sign indicating that Windows Home Server is not installed.