Preventing applications flashing in my taskbar - is this possible?

In this case, which chat program are you using? If you are using Digsby, it ignores the flag and will flash the window forever. I use Digsby myself and that is the most annoying "feature" of the program! If it is Digsby that has the problem, you can find some information on controlling on their forums at http://forum.digsby.com/viewtopic.php?id=3361.

If it isn't Digsby, the best thing to do is contact the developer of the application and ask them to follow the Windows settings rather than forcing Windows to flash constantly.

EDIT: my "solution" below is not correct. It does the opposite:

0 = taskbar button flashes until you click it

This sample chapter from the book "Microsoft® Windows® XP Registry Guide" contains some information related to focus:

The settings in the Focus category prevent that scenario by causing applications to flash their taskbar buttons to get your attention rather than stealing focus from the application in the foreground.

The default value for ForegroundLockTimeout is 0x00030D40, or 200000. This value is the time in milliseconds before Windows XP allows an application to steal the focus from the foreground application. To convert 200000 to seconds, divide it by 1000 (200 seconds). You see the value ForegroundFlashCount in the table twice, because setting it to 0 causes the taskbar button to flash until you click it; otherwise, the taskbar button flashes the number of times you set in ForegroundFlashCount.

HKCU\Control Panel\Desktop

• Prevent applications from stealing focus: ForegroundLockTimeout
• Flash taskbar button until I click on it: ForegroundFlashCount
• Flash taskbar button N times: ForegroundFlashCount

There is a registry setting in:

HKCU\Control Panel\Desktop
     ForegroundFlashCount (DWORD)

Try to set it to 0.

Warning: be careful when you edit the Windows Registry.