Just for fun, try exercising the side-chain inputs with a 1/4" jack. Insert and remove the jack several times. Using some Deoxit in the process won't hurt.
Sorry, I ASSumed you may not be familiar with compression. MY bad.
I suggested oxidation on the side chain earlier, but based on the light behavior the compressor seems to be keying off the inputs.
Looking quickly at a DBX 266 (non XL) schematic it looks as though if the reduction lights are lighting, either the bypass switch or the VCA is malfunctioning. There are a few 'jumps' on the schematic that I didn't find so I may be missing something important.
Is the Bypass LED turning on and off when you hit the bypass switch? Maybe
exercise the bypass switch a hundred times
Are both channels behaving identically?
Did you test each channel independently with 'stereo couple off'? It seems odd that you'd have two bypass switches or two VCAs go out at the same time, but there is also circuitry that ties the two channels detection circuitry together.
Does the stereo couple light go on and off? Maybe
exercise the 'stereo couple' buttonI'll let one of the more knowledgable electronics guys comment if they have time to dig further.
Here's the schematic:
http://adn.harmanpro.com/product_documents/documents/546_1324055740/266%20Schematic_original.pdf The only docs I found for the UPC1252 (VCA) are in Chinese.
http://pdf1.alldatasheet.com/datasheet-pdf/view/103346/ETC/UPC1252.html
