You can jumper a power supply to see if it will start using a paper clip or a piece of stiff wire. I recommend wrapping the paperclip in some electrical tape in the middle so you don't accidentally shock yourself, but follow this procedure. http://www.overclock.net/t/96712/how-to-jump-start-a-power-supply-psu-test-a-power-supply-and-components
Make sure you completely disconnect the power supply from your computer before trying this. if the power supply is fine it wouldn't hurt anything if you left it connected. if it isn't, then you could have problems. This is also how you jump a power supply to pre-prime a water cooling system for anyone interested. With the paperclip in, if you plug it into the wall and the fan spins up and the light turns on, the power supply is probably intact and you start looking at other culprits.
As for power supply recommendations, That's going to be one area I'm going to be of little use, since for all I know you use a completely different power type over there. I'm guessing you use 208v (230v) based on the label of your other one. That particular power supply is a 400 watt unit, so essentially "anything" will be an upgrade compared to it. If they are available in the area, they should work. If you can find one, an antec, cooler master, thermaltake, or enermax power supply would work well assuming they make them for that voltage. You should be able to find something locally at a computer store for around the budget you mentioned if I'm doing my conversion math right.
As to what that blinking light could be, it really depends on the motherboard. the fact that you are getting any power at all for it to blink may indicate that the power supply is fine and that it's a different component. It's almost certainly a hardware issue somewhere, though it is possible the bios configuration just crapped itself and needs reset (that's especially possible if you have an older Nforce chipset motherboard) If it isn't the power supply, at that point Ram becomes your most likely suspect, followed by the other PCI cards and the motherboard itself.
is it making any beep noises when you try to power it on? any weird fan twitches? do any of the fans look like they broke or are stuck to where they wouldn't rotate?