Check your wiring, look for any solder splashes or stray wire strands.
It sounds like you might be shorting one of the supply rails (9V or 5V) to ground.
The LED should only blink when power is applied to the circuit while holding down the footswitch simultaneously. If the LED blinks while you're holding down the footswitch then the microcontroller is restarting for some reason.
My guess is that holding down the footswitch is putting an excessive load on the 5V line for some reason and the regulator is dropping out momentarily, causing a full reset condition to occur.