I believe the CD player is optical and only has two (colored) cables fed to it. Not sure what that black copper wire goes to, I never found anything that it might have been connected to.
As for the Lights flashing --- pretty sure the PSE was the issue! I found that I was not the first to work on it, as it already had a plastic grocery bag wrapped around it, but it was not wrapped very well. After removal, I tore the unit apart, found there was a good amount of corrosion on top and bottom of the circuit board. I cleaned everything off with a plastic brush and electronic contact cleaner (which didn't really fair well by the way). I got most of it off with a LOT of scrubbing, drilled two holes in the bottom of the PSE housing , then sealed the board with a polycrylic (all I had), and re-assembled, WD-40 on each of the connectors. I bagged the whole thing in a zip lock freezer bag, then three layers of plastic grocery bags + sealed with electrical tape at the top of each bag. Maybe overkill, but I did not want this happening again. Put the PSE back in the original foam and put back in place. No more flashing! Don't think I fixed anything else (still missing two prongs on the black connector), but the problem seems to have gone away.