Hope you get it fixed. Does sound like a loose wire to me, or you've connected the activity wire to the wrong pin on the internal IDE.
I don't think he has a FastATA(activity wire) I was just using that page to show which pin goes to the LED. I think that pin should have continuity with the LED.
I think most likely its a bent/broken pin or the CF card malfunctioned and quit putting out that signal.
My LEDs on my PCMCIA Wifi card quit working for some strange reason. I suspect maybe the card got slightly bent.. I thought my PCMCIA port died.