After reinstalling Indigo and letting it build new prefs (I deleted the app and prefs), I can now connect to the PowerLinc V2. The Indigo log shows that it is v2.12 and also mentions some other techie sounding stuff.
Unfortunatly, it still cannot control the X10 stuff. It show in the log that it has , but it hasn't.
You also asked what the LED is doing. That's difficult to tell. I have a device that tells me what my current energy use for my home is. It also uses the powerline to communicate. It seems to cause the LED's on the Insteon modules to blink when it's transmitting. About once a second.
http://www.theenergydetective.com/
It appears that the PowerLinc is trying to blink at the same rate.