Car won't start with Advanced Key

Just bought a used '07 RX-8 with 38k. I previously owned an '07 Speed6 and had similar issues with the advanced key...just picked up the car yesterday and the key was working fine until i tried to start it this morning.

The ignition wouldn't turn and the red "KEY" indicator flashed on the dash, tried replacing the batteries and even though I can lock and unlock the doors from the advanced key, I can't get the ignition to turn over unless I use the valet key.

Any thoughts? I don't want to have to take it to the dealer since its probably out of warranty.
 
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