I am just learning Avid, and so far I feel like I did moving from iMovie to FCP. Anyway, I have been having a problem with the VU meter in Avid MC 4. In both the Audio Tool and timeline, the VU meter blinks on and off. Even if I send tone, it will blink 3 times, then stay on for a few seconds, then blink 3 more times. The tone stays constant. This is a big problem because it blinks when I'm playing back video too. There's no way for me to know if my audio is at the right level.
On a possibly related note, I also get an error when opening the Audio settings window. See the attached images.

You are clearly having a problem with the software, not "pilot" error. Try reinstalling the software or check out the forums of AVID.com, seems like a problem specific to your system.

Possibly an incompatible sound card - do check the AVID.COM forums for more exact technical advice.