Thanks for your reply. Adding the line
to the DigitalReadSerial sketch shows the same behavior for the LED, irregularly on, irregularly off, fading in and out when 3.3v is put to digital pin 2.
I have tried uploading code with the board specified as "Ethernet" and as "Uno". Which is correct for the "Uno Ethernet" Adafruit ID 418?
At the bottom of the page http://arduino.cc/en/Main/ArduinoBoardEthernet
there is this:
============ Quote ============================================
If you want to use a FTDI cable to download your sketches on the Arduino Ethernet, please refer to this guide: Upgrade the Arduino Ethernet bootloader to the latest version
============ End Quote ========================================
Thanks for your help.