Is there a way to set callforwarding to voice mail, without having the callforward/Do not disturb light flashing?

Since so many people object to the flashing light, I've taken to the habit of changing it to be solid for forward and flashing for DND. You can change it in your system options tab.

Have you tried to set an day/night/lunch/break intercept destination as 500 in ext programing

Yes as Country wide said,the intercept on the kxtda will send the call to mailbox, you will probaly have to reduce the intercept time as it is set to 40 sec