mcdhu
I have the Netgear DG834G v2, with its original firmware. (I'm too afraid to update it). The little men inside it have always turned the lights on and off on a frequent basis, mainly from the Netgear to the Internet, less frequently from it to the attached pc.s. (1 cat 5, 1 thru the elec cable, (Homeplug) and 2 wi-fi.)
I investigated it once, about 18 months ago, and nothing untoward was going on.
The flashing lights however, were a pain, so I re-jigged the wiring to ensure that I can only see the Netgear when I really have to. It's hidden behind the screen of my study's desktop. The little men can flash the lights on and off as much as they want.
With a very large amount of "touch wood", no pc.s infected with anything so far, touch wood.