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Explanation: The activity LED on the system case flickers every few seconds, even when nothing is going on with the PC.
Diagnosis: There are a couple of possible explanations for this behavior. First is Windows 95's "auto-insert notification". The feature that automatically loads software from CD-ROM drives works by constantly checking to see if there is a CD-ROM disk in the drive. This causes the activity light to flicker on some systems. Another possibility is that there is system work occurring that you may not be aware of. Windows does do some housekeeping work at occasionally odd times, and there can also be background tasks that run from time to time.
Recommendation:
Pay close attention to when the LED lights up. If it is regular, every three seconds or so, this is the auto-insert notification. If it is irregular or hard to track, then it is likely just periodic system activity, which is perfectly normal. For example, several seconds after closing a Windows application, Windows may rearrange its internal memory structures and you'll see it access the disk a great deal. (During normal activity you can usually hear the hard disk operating, as well, while the auto-insert-notification-induced LED lighting is not normally accompanies by any actual hard disk activity.)
If you do not need auto-insert notification then disable it. This can be done from the Device Manager. Go into the Control Panel, select the System icon, then the Device Manager tab. Click on the "CDROM" icon to reveal the CD-ROM drive in your system, then select "Properties" and then "Settings". Uncheck the "Auto insert notification" checkbox.
Try moving the CD-ROM drive to a different IDE channel, if possible. This may cause the problem to go away.