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Do you have a spare key to try? The circuit board in the key may have gone bad. If the other key still works, then that is likely what happened.
I bought key at the stealership when I got the car 2½ years ago and kept it as a spare. When the button cover on the original key wouldn't stay snapped on, I got the new key out. I figured since I paid $250 for it, I might as well get some use out of it. It worked for a month and then the same thing happened to me, the buttons wouldn't activate the alarm anymore. Tried a new battery, and still nothing. The LED blinks fine. The old key works fine. Went back to the stealership to see if there was anything that could be done, since for all practical purposes, the key was nearly unused. They told me that since it was out of warrantee, there was nothing they could do. I would have to fork over another $250 for a new key.
To solve my problem, I took the circuit board out of the old key and put it in the new key fob. I keep the old key as a spare now, and buy all my parts as far away from the stealership as possible. Thank goodness for the Internet parts resources.
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