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I just bought an IQ524 and it does the same thing. Tech support says to take it back and exchange it. Bummer since I spent the last 6 hours loading software.
I guess I'll buy an Apple.
In the past couple of days when I use Shut Down the Ambient Light starts to flash. It goes through its three light levels at about one step per second and then resumes at the lowest level. It continues to flash all night if I don't pull the mains plug out. When I plug it in next day it immediately starts to flash again. Start up, using the Power on button top right, seems normal but the light continues to flash. Yesterday it stopped flashing after about an hour when I was typing an e-mail, today if flashed all morning before it stopped and I was able to use the light control button to turn it off
anyone got any ideas because the continual flash is driving me nuts 
August 11, 2009 8:38 PM
I have the same issue. All of a sudden, the ambient light is blinking at the three different light levels. I do not recall even turning it on. When I push the light button on the left side of the monitor, nothing happens. When I follow the instructions from the booklet to go Windows Vista Start Button, All Programs, HP, and then HP Light (where the heck is this?) the last instruction is not on my machine. Any suggestions for me?
August 15, 2009 7:29 AM
I asked customer specialist. They request me to send computer for repair. They replca the part. But they damage my panel border(Alumunium).Now ambient light problem is solved but new problem arise.
August 20, 2009 6:25 PM
I called HP and they are sending out a box for me to return my touchsmart. Hopefully it will come back soon and fixed.
August 21, 2009 7:19 AM
I was having a problem with the light also. The switch was not operating the light correctly and would sometimes just shut off on its own. My fix came about when the hard drive crashed and I had to replace the hard drive ( thanks HP ) and reinstall everything. Its now working fine. Maybe a reinstall of windows could help.
View unverified member's comment - posted by larmyster
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View unverified member's comment - posted by uconlin