Yes, the blinking denotes receiving MIDI, and if I increase on the Arp the number of steps per beat for instance, the blinking on the RK changes along. The blinking happens on for the USB and regular MIDI connection from the Arp.
MIDI Thru on ARP is off.
I've reset the RK so I'm sure it's in its most basic mode (simple MIDI Thru) and the issue remains, the lights blink but the other synth doesn't respond. With the same cable, the Digitone kan send USB to the RK and it will be passed on to the other synth; the Arp only works directly with the regular MIDI out port.
To check if the RK is involved, I removed it from the chain and instead tried a Kenton USB MIDI Host Mk3 as USB host to the Arp,. This powers it and should pass data it receives on USB to its regular MIDI out port. Again, the Digitone can play my other synth, while the Arp doesn't. The A/B test is simply swapping the USB cable between Arp and Digitone. Once I plug the same regular MIDI cable directly into Arp it works again, so I'm sure the Arp is configured correctly to send MIDI to the synth.