Arduino Bluetooth shield - flashing blue LED

My module flashes with blue LED once per 2 seconds. It behaves this way when TX and RX are completely disconnected (no jumpers$ AND when I connect jumpers for TX and RX (pins 0/1 from Arduino, powered by battery to prevent serial conflict with USB).

Not only is my shield not discoverable; it does nothing besides flash blue LED.

What diagnostic codes or info can I pull from the shield to tell me possible causes? Any obvious culprits?

Please try to connect bluetooth shield and Arduino board to your computer via USB, with the following configuration:
Arduino pins BT shield
RxD 7 TxD
TxD 6 RxD

Then please try to test with this code on Github

In this case, this Bluetooth shield can be resetted and ready to be connected by other devices like an android with SPP app installed.