What I was getting at with my suggestions was something I ran into awhile back. I've had a lot of phones, and Google saves some settings that it automatically reloads when you log into your account. I had two Motorola devices - the Razr Maxx and Razr M - where it was clearly software related. I replaced my first Maxx b/c I thought it simply wasn't working. We opened up the replacement and powered it on. Tested the notification, and it worked fine. I logged into my account, let it sync up as I was driving back to work, and lo and behold the LED stopped working again. I was able to "reactivate" it by loading up Handcent or GO SMS and forcing the LED through one of those apps. When I replaced the Maxx with the M, same scenario - worked fine, then logged in and it stopped working, apps got it working again.
Now here's my theory, since mine were clearly not hardware related - I've had numerous HTC devices, and HTC allows you to specify what will and won't trigger the LED notification light. Google saves those details so when you reset and resync, it will load back up the exact same LED preferences. Based on what I saw with both of my phones, I think Google's saved preferences were somehow disabling the LED notification when it resynced with my Motorola device. Since Motorola doesn't allow you to enable or disable the LED in it's UI, you need something else to enable it from a slightly deeper level.
Given that it's not very likely to get two devices in a row with a broken LED (though I see we have two posters that had that happen! ), I thought this software-based suggestion could be it.