I'm going to guess that you are using the 1/4 analog inputs on the 7600. Since it has no 1/4" output, these cannot be bypassed by relay, so they mute when you bypass it. (See p.37 in the UM). The solution here is to use "electronic bypass" on the 7600.
But, I have no ideas on the flashing between mute and bypass. This sounds like some kind of hardware problem. Sorry.
