I'm just wondering if this issue might actually be due to upgrading the older slidelets to Captivate 5.5 format.  I just tested Cp 5.5 slidelets that had the rollover hit area and rollover object set to exactly the same size and position on the screen and I couldn't get them to flash as described. 

I remember this issue occurring in previous versions and it was one of the main reasons I stopped using slidelets. 

But I'm wondering if perhaps you could try just removing a few of your slidelets in one of these upgraded Cp4 projects and then inserting replacement slidelets from Cp 5.5 to see if doing so might resolve the flashing issue.  Perhaps this is just one of those annoying upgrade issues that we sometimes see.

Yes you are correct.  There is an issue once you add images into the mix. 

It seems that if you have an image inside the slidelet, and you place your mouse over the image, then the slidelet loses focus and thinks you've moused out of the hit area.  Then it immediately detects your mouse cursor IS in fact over the hit area and turns itself on again. But because this then means your mouse is again over the now visible image, it turns off again.  This happens very quickly and causes the flashing.  It's definitely a bug.  But if Adobe hasn't fixed it yet, I don't have high hopes they will now, with Cp6 just about on the doorstep.

It seems slidelets were only ever intended to be used where the hit area was NOT over the top of the area that would be revealed on mouseover.  So you can for example have a list of items down the side of the screen with rollover slidelets on each one.  When you mouse over an item, more information becomes visible beside it. In this situation they seem to work quite well.