I can't imagine why activating ACAtune would trigger it but that flashing looks a lot like the flickering some A600s get when accessing PCMCIA. Which video output are we watching? This probably doesn't apply if it's RGB but it might just be worth checking out the fix in this thread since you have a rev1.3 -
This wouldn't directly explain the hangs but it could indicate a power issue, even though the picoPSU should be good. Have you got a brick you can try?