I have the same receiver, the light only comes on when it's decoding or receiving a multichannel signal. (if you read the fine print above the light it says "Multichannel Decoding")
BTW, enjoy this old receivers surround output. Since my friend sold it to me he's been trying to acquire another one since all the new receivers he's bought hasn't been as nice for movies/surround as the old STR-DE845 is. Too bad I can't say the same thing for it's two channel music output quality (but I'm comparing to my old Carver separates system.)