I checked
http://www.youtube.com/watch?v=IVB6A4CDGjk and verified that I was indeed seeing 6 flashes. The light then goes out, but doesn't come back on for the 7th. THe pause between flash 1 and 2 seems normal. And getting only 6 flashes on a computer PSU is normal, since the 7th requires an extra voltage connection that the PSU doesn't provide.
That makes sense. I thought you had 5 flashes and the MPU in the machine.
If you're testing the MPU out of the machine you can jump the display interrupt output to the zero cross input to fake out the 7th flash. This is explained on pinrepair.com.
Bally MPUs can be flaky when powered with a PC power supply. I've found that I have to do manual resets to boot MPUs on the bench when the same MPU will boot fine in a machine. My guess is that the switching power supplies take longer to become stable.
A longer reset is not necessarily a bad thing. You can add a cap (described on pinrepair) to lengthen the reset but I don't use that method personally.
If you need to rebuild the reset section I suggest using a Dallas DA1811 or equivalent instead of replacing the whole original circuit. Ed should have these:
http://www.greatplainselectronics.com
From that, I don't see how it could be anything BUT the voltage regulator.
Quite possible. Keep in mind that bad connections or loose mounting screws here can cause this problem. The case of the regulator needs to have a good connection to the trace on the back of the board. A lot of these screws have been soldered on the back of the board. If the solder cracks or the screw comes loose you won't have a good connection to the regulator and you'll see a voltage drop under load.
Or you could just have a bad regulator but I would check that stuff first.
the MPU power draw is a bit suspect,
The only way to really tell if it's really drawing more than it should would be with an ammeter, though I would have to test a "good" one to tell you what would be typical.
but the low draw on the lamp driver is likely because most of the feature lights aren't lighting (only the drain special, 4x, and low bonus lights 1 and 4 are lighting.
The lamps won't put much draw on the +5VDC supplied to the lamp driver board other than to turn on the SCRs to light the lamps but that shouldn't be much of a difference from no lamps on to all lamps on. The lamp current is flowing through the switched illumination circuit. I have never measured how much current each board draws (should do that) but I would suspect the lamp driver board will draw less than the MPU regardless of which lamps are on.
This may be normal during boot, or may indicate an issue with the lamp driver, or might be a side effect of it being underpowered. The number of lights vary, sometimes none at all light up, other times I only get the special lights. Also interesting to note that the 1 and 4 will turn off after a while of being on, and stay off for a period of time until it's left off for about an hour. I've since disconnected the primary and aux lamp driver boards.
I wouldn't worry about that until the MPU is booting consistently.
What I would do is fix the MPU out of the machine, then fix any power supply issues remain after fixing the MPU and go from there.
If you would like to do more thorough testing of your MPU I still have a couple of these available:
http://warpzonearcade.com/?p=356
I'll also have a better version coming out in the near future, but it will cost slightly more.