Ryan:
I think you have a defective unit. The IR sensor is over sensitive to light.
To answer your question, the IR543 only sends X-10 power line signals. When you press the buttons on the top of it, it sends a X-10 signal down your home's AC power line. The LED lights up when you do this and this is normal.
Robert
RCI Automation
rciautomation@compuserve.com[Link: ourworld.compuserve.com]