New toner cartridge is not setting?

Did you remove the strip which keeps the toner sealed? Check out step 3 on this video: http://www.office.xerox.com/userdoc/P7400/7400_Web/videos/toner.html

keep working until it stops and then place the new one.
some printers will not know how much toner is left after the warning, so at one moment it can just start printing light in vertical lines, this means the toner is near empty (but you can shake the cartridge slight, to get some more pages, if you dont have new cart. at hand).
so keep printing and dont worry

The inkjet uses ink, not toner. When the light is blinking it indicates something is wrong with one of the cartridges, such as can't find it, not installed, out of ink, improperly installed, printer has died. First thing to try is to disconnect the power (not just power off) for 5 - 10 minutes and reconnect. If that does not resolve it, inspect the cartridges and reinstall them. If you have another printer that uses the same cartridges, try the cartridge in it. if not, get another set of cartridges and install them. If none of these steps resolve the problem, chances are that the printer is the problem and is probably not worth spending additional time on it.

Is this a remanufactured/ compatible unit? I suspect that the toner reset lever on the cartridge has either not been installed or not properly set. return for another one

Forget buying a new toner cartridge and don't bother re-installing anything - This is a power supply problem - The electrolytic capacitors fade away after a few years of power on and the high voltage to the printing engine drops too low.I tried a new toner cartridge - no help - re-installed drivers - no help.If you can handle a soldering iron or know a friend who can, replace the following capacitors on the power supply board on the LHS (power cord side). Make sure you use low impedance 105 degree power supply types. Warning - high voltage !!! power cord out and wait 30 minutes before touching anything.
C374 341 503 529 (47uF/35V), C526 (1uf/50V), C506 (0.47uF/35V), C515 (100uf/50V). All the others tested fine in mine. Also make sure you install them the correct way around!
Now I have "black as black can be" prints just like new and I set print density back to 2 not 5 to save toner.
enjoy ;-) - Ray P

I don't suggest refilling cartridges as I work on printers every day but seems to me that you have done everything correctly the only thing I think you have done is either filled with incorrect toner thus giving a incorrect reading or when moving gear you have dislodged the pin that activates the reset procedure.

Thanks J