Yep - for a decent guide as to how to do this you could do worse than take a look at
http://blog.davidwarburton.net/2010/...rage-for-esxi/ - it's actually pretty easy (especially if you only have to pesent a single volume which is hardware RAID protected). The pointer file will say that it's the same size as the raw LUN that it points to, but it only actually takes up a few kb on your vmfs datastore.
As for your red light issue: not sure what else to suggest, as I only have an N36l and an N40l and neither of them exhibit this behaviour
- if it's just cosmetic I'd not worry too much about it.