even when I have no new messages.. it is always flashign away telling me I have new mail...

Have you tried expiring your cookies via My Stuff to see if it'd clear it up?

If what Jgeoff said doesnt work, I am sure if you go into the database and do a search for your pms you will see that even though it was read, one of the variables is off. You can delete the pm from the database. I have seen his happen a few times, it is real easy to see which pm is messed up in phpmysql.

I have this as well, even though my inbox was empty

This a known and old problem. Somewhere here in the forum is a sql querie to fix this. Something with a timestamp if I remind correct.
Take a loo to this

Thanks - there was one on mine that was showing as unread, cleared that and now my indicator has gone

Would be ideal to include this query in the core code under a button that would say "Mark all PM's as read".

That query references does not mark them all as read. It merely checks to see if unread PM's exist for a particular user. I had to database dive.

In my case the PM that was showing as unread had already been deleted and was not in my inbox.

I'd love a mark all read button...

Or an "ignore all" button