Forget the router settings, especially if you are a novice -- they are unnecessary at this point.
Unplug the OBi from all three cables: power, Ethernet and phone. Turn the OBi upside-down on a flat surface. Straighten a paper clip. Find the small dimple with a hole in it, on the now-facing-up bottom of the device. This the reset switch. Gently insert the wire and depress the switch until you feel a click. Keep the switch depressed, while you use your other hand to plug in just the power cord. Continue to hold the switch down, and wait at least 10 seconds (or more - it won't hurt). Then release the paper clip, turn the OBi over, and watch while it restores to factory defaults, and then reboots. When the power LED is solid green, and doesn't change back to flashing, it's done. What is the Phone LED doing now? Plug in the phone. Does the LED change? If so, what's it doing now? If it is blinking on and off, while the phone is on-hook, then try another telephone. If it still blinks, and you do not get a dial tone when you pick up the phone, then the OBi is defective.