asterisk users - Nov 2010 - cisco 7970 multiple lines with asterisk

Hi I have a problem that I can't pass.

I have asterisk and cisco 7970 phones with 8.0.3 sip firmware.
I registered two extensions:

Line1: 260
Line2: 160

Regardless of which extension I call, always Line 1 on cisco is blinking.
This makes impossible to recognize which extension is calling.
Also, I've set Line 2 to be automatically answered with speaker phone
(intercom). Even though I call extension 160 from Line 2 it is never
automatically answered.

Can anybody help me with this issue? I've been  searching Internet to find
clue on what I do wrong for few days. No success.
Anybody had problem like this?
Any hint would be appreciated.

Peter
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