Hi
The LEDs connected to the KS8041NL are controlled by the KS8041NL itself and not the Kinetis. Check the strap inputs which define the meaning of the LEDs - blinking LEDs usually means that there is activity but in your case it sounds that they may not be working in defined modes (there are some reserved modes that should be avoided). Generally check all strap inputs because strapping to an incorrect mode may also cause unexpected behaviour.
Check that your SW can communicate with the KS8041NL via the management port and check also the register settings to ensure that it is not, for example, strapping to isolation mode (or similar.
Regards
Mark