So you're saying that the PSC-05 "blinks as it should"? Just to be sure: normally its LED is always on, and will blink off whenever the Ocelot is transmitting X10 (or when the PSC-05 is receiving from another device on the power line).
Now, if you start up C-Max and once you attach to the controller, go in the X10 utilities and select "Monitor X10". Do you see X10 activity (with the most recent at the top) whenever you use a palmpad or whatever to send X10 on the power line? A command pair should make the PSC-05 LED blink off twice, and you should see two commands in the monitor screen.
If that works, then try the "Send X10" utility...but close the "Monitor X10" window first! To send a A/1 On command pair, click on radio buttons "A" and "1" and click on "Send". Then click on "A" and "On" and click on "Send" again. You should see the PSC-05 LED blink off each time you click on Send, and the light switch at that address should respond after the second command.
"If you don't know what you're doing, do it neatly..."