It doesn't sound like a virus. It sounds like a spammer is trying to contact you using the yahoo IM.
I poked around on my Yahoo webmail homepage, and examined the Online Applications section. Essentially, I found the list of contacts, and the ability to close it, or sign out (oops, didn't know it was on as I don't use it), which I did. The flashing has stopped, and things returned to normal. Problem solved!!
Thanks very much.