Rain sensor is pretty much where I got to as well. I pulled the wires, and turned that off in the software. At first, no different results - still no blue light and valves only clicking.
I thought maybe wifi was weak in the garage, so I put a WAP right next to it, reconfigured network to the new WAP, and no dice.
Moved it back to the main wireless, turned off the two zones I wasn't using (7 and 8) and turned off the Smart Cycle setting. Tested, and it started working!
I tried to put everything back to the original install state (all features that I turned off, turned back on, rain sensor plugged back in) and it still worked, so I'm not exactly sure what solved the problem, but it's working now.
No rain sensor plugged in, feature turned off
Inactive zones turned off
Smart Cycle turned back on