NavList:

That is just normal. The sextant automatically stops the observation after two minutes. The reading on the display is the "half-time" reading which is added to the start time of the observation to determine the average (actually mid-time) of the observation.  It reads 60 seconds after it has run for 120 seconds. Try this. Stop the observation after 60 seconds on your watch and the display should display "30."  

The flashing lights tell which way you should adjust the altitude knob to determine the average altitude of the observation. Try this. Set the sextant to a whole number of degrees and start the observation running. After 30 seconds of real time on your watch move the altitude up to the next whole degree. After 60 seconds of real time stop the observation. The lower light should now be flashing. Now dial down 40 minutes of arc and  then the top light should start flashing showing that you have overshot the average which shoule be about 30 minutes of arc. Now go back up and center on the average by watching those two lights.

gl