I just finished uploading 3.16, what a complete pig to install. I used the Dronefly pdf, not bad but not perfect, and various forums, and this youtube video:
http://youtu.be/ZLRjRllV0UI
Ayway, in the process I got every demented warning possible, including what you describe. I reloaded the software, again, and started over, IMU advanced cal, then unlpug everything, compass cal, then advanced cal again, unplug battery MC too hot warning, 5 minutes, advancec cal again, too hot warning, ignore it, leave the battery hooked up hit yes and continue. Finally got rid of those flashing lights and all is working. Brief test flight, some wandering in GPS, tolerable. keep at it and just keep resetting and redoing and it will eventually come. What a POS software, really. Took me two hours.