Yes it should,it shows the ultrasonic movement detectors for the alarm are working.Those are the parts near each sun visor. If you sit very,very still it will stop flashing !
Before someone corrects me,I see no reason why you should not disconnect it
It is not a bulb but an LED so you may have to cut one wire to it.
Failing that stick a small piece of adhesive tape over it.
I never notice mine flashing on a 460?
I have the same problem. It occured after I changed the car battery. My Volvo dealer explained that this can happen and they need to reset it. It is also an indication of a fault in the system. Again the Volvo dealer will check it and reset. I have found the reset procedure for the S40 but as yet no one has posted a way of reseting this on the 440. I will just have to pay the dealer to do it!
Hope this helps.