I haven't "properly" flown the 757 until now so I can't tell if this is right or not.
A friend of mine was talking me through how to use all the systems, so I set the IRS to align like he said, then when the light went out, to NAV, but the "ALIGN" light started flashing. This doesn't happen for him so I was wondering if this was supposed to do this? In the manual it's sort of confusing compared to user written guides, but neither have produced the same effect as my friend.
What do I do?
Cheers :)

Just set it to NAV from the start.  I'll let others sort out whether that is realistic or not.

Ok yeah, I was watching one of the video tutorials linked in one of the sticky topics.. It said set straight to NAV, which I did and the "ALIGN" lights stayed on for a while, probably about 3/4 minutes, then started flashing irregularly, not like they were before.

Did they ever stop flashing?

with the new update you will need to set the coordinates manually, that tutorial was for the aircraft before the 4.3 update as far as i can tell. to set the irs manually simply copy the last coorodinates to the scratchpad then enter it on the boxed line or you can use ctrl-z to get the coordinates from fsx and then punch that in.