The light doesn't come on at all, I've tried two different USB cables on two different xbox ports. I have used optical from the 360, optical from the tv, and optical from the TV with the setting on Dolby digital.
Besides that, the TV's have been set to redirect the audio signal from optical...
Got mine today, Im having trouble with the DSS. They work fine with the audio coming straight from the red and white cables, but trying to put optical or trying to redirect the RW audio cables gives me silence. No lights come on on the DSS either.
Just a heads up if you're spending cash, you can get a sealed copy from newegg for $14.00 and FS.
http://www.newegg.com/Product/Product.aspx?Item=N82E16874103235