Michael,
Welcome to the Discussions!
The button on the battery gives you a visual indication of the charge level; 4 lights (LEDs) indicates a full charge, 2 indicate a half charge, etc. One blinking light indicates the charge level is too low to run the powerbook.
If you see a red 'X' over the charge level post, it indicates the powerbook cannot see the battery. If you remove/reinsert the battery and the 'X' temporarily disappears, it is probably suggesting there is just enough of a charge for the powerbook to register its presence, but then voltage drops low enough that the 'book can't see it.
Since you have performed a PRAM reset, also perform a power manager reset:
http://docs.info.apple.com/article.html?artnum=14449
If your battery is 3-5 years old, it probably needs replacing.
Will the battery charge when the 'book is asleep or turned off?