Why does it just seem to quit working sometimes. When I try to type a word the border flashes blue. Reinstalling it helps, but it seems to revert in a few hours.
Only issue I had when swype beta was that on first installation of it, after the installer program selected it and activated it as the keyboard it wouldnt work (did the blue blinking you mentioned). But I disabled it, re-ran the Swype Installer program, and re-setup per the instructions and now its working fine. Might try re-running the Installer?
That's been an issue with beta for a while. Happened on my Moment too. It'll happen everytime you reboot. Quickest way to fix it is to select a different input method and then reselect Swype and it'll work until you reboot.