It turned out that the problem was with me, not the Temposonic.
I found out that the blinking LED means the Temposonic can see the magnet, but it is out of the setup range.
I didn't realize that it also gives a full voltage reading when out of range like this.
When I moved the cylinder up about a half an inch The red LED stopped flashing, and I started getting a good reading again.
The range of the temposonic transducer was right there at the bottom of the stroke of the cylinder.
With some adjustments the problem went away.
Thanks