RE: Cooling/Overheating problem
The symptoms you describe are nearly identical to the problem I had
with my '85 (same engine/cooling system).  The bottom line was a bad
radiator.  Worked fine (except climbing mountain passes) at normal
highway cruise speeds, but insufficient cooling capacity in trafic,
etc.
I used to run mountain passes with the front and rear heaters on full
blast to get just enough cooling capacity to survive.
The blinking light  problem I'll leave to others with more detailed knowledge.