preload option loads the game disks to memory. if it's disabled, whdload has to switch to OS and read disk contents from HDD. That's why the flashing occurs.
Some games must have preload enabled (I believe non dos games), if you don't have enough RAM to load disk images, they simply won't work.
the ccheapest option would be either a 2mb PCMCIA SRAM card or a expansion slot RAM board. The price difference won't be too much, so I would strongly suggest a expansion slot RAM board, cause PCMCIA memory is slow. A RAM board could set you back 60-100$.
