That may be the issue if the battery can not get a full charge then the power up mode you using may be wrong. If you turn on the iDSD without connecting to the USB first it will use just the battery and will ignore and not use the 5v line from the USB for even when connected latter. You have to connect to an active powered USB cable with the iDSD turn off first and then connect the USB cable to the iDSD and just then turn on the iDSD then it will use the 5V from the USB cable and trickle charge the battery.
Try turning off the iDSD by turning the volume control down all the way counter clockwise and you will fell a click. Disconnected the USB cable on the back of the iDSD wait almost 10 seconds and then reconnect the USB cable and the light should change to blue for charging while the iDSD is still turn off and let it charge overnight and the light should go out when the battery is fully charged. Then you can turn on the iDSD while the USB is still connected and the iDSD will be using the 5v power from the USB and trickle charge the battery full time. On my PC the USB 5v line is always active even when my PC is powered down. My PC always have the 5v standby power always active to the USB 5v line. Most of this is explained in the iDSD manual and my understanding from that. The red light means that the battery is weak.
I've tried charging it that way. I'm using the USB cable supplied in the iDSD Nano box. I assume that is the "active powered USB cable" you describe. The unit is off, the blue charging light is initially on and then goes out. So it's not clear whether the unit is still charging at that point or not.
When I check it later, I get the same behavior - blinking red light once the dial is turned on.