I have the AT&T Model 854 4-line phone. When the phone is plugged in the phone starts toning and won't stop.

Thats because its looking for the intercom number to be assigned. as soon as you assign one in programming it will stop.

The above answer solves a different problem, but not the Line Status Indicator lights.

To program out the additional lines:
Press "Program", *, #
then press 2, 3, or 4 for each line status light you wish to change.
then press "0" to turn OFF line status
or press "1" (when you add lines 2-4) to turn ON line status
then press "Transfer"
You should hear a confirmation tone.
Repeat for any lines that you wish to exclude or include.
Excluded lines cannot be used even if service is provided to the line. So you must turn ON the line if you add service.

This information is from the Lucent 0954 user manual Page 11 (which works for the 854, 874, and 954)

The above answer refers to the issue of a constant ringing (intercom patterned ring) even when there is no incoming call.
If you have more than 1 of these phones you must assign an intercom number to avoid a constant ringing.
To assign intercom number:
"Program", *, #
Enter a 2 digit intercom number from 11-22
Press "Intercom"

This information is from Lucent 0954: Page 10.