When you insert the key and turn to ON[RUN], the SECURITY lamp will light during the bulb check. The TDM reads the resistance of the key pellet and compares that to what is stored in its memory. If the reading matches, the SECURITY lamp should go out after 4 or 5 seconds.
The TDM (or BCM) sends a ground to the TDR to allow the starter to crank when you turn to the START position. Simultaneously, it sends a signal to the computer to allow fuel to the injectors. Your engine is allowed to start.
If the key pellet is the wrong value, the TDM will not send signals to allow the starter to engage or fuel to the engine. The TDM will shut down for ~3 minutes and the SECURITY lamp will remain lit with the key ON or OFF. When the ~3 minute timer has expired and the key is cycled from OFF to ON, the TDM timer is reset. If you try a key with the correct pellet value, the engine should start and run. SECURITY lamp should be off. If there is still a problem with reading the key, the TDM will light the SECURITY lamp and start the ~3 minute timer again.
If the sensing contact circuit is open or shorted (cannot read the key) or a defective key is used at the time the ignition is turned ON, the SECURITY lamp will flash at a rate of once per second and the engine will not start. No three minute lockout will begin.
The SECURITY lamp will also flash at once per second if a new, unprogrammed TDM is installed and there still is a defect in the key reading circuit. The engine will start in this condition, though.
The lock cylinder circuit is continuously monitored. If a fault lasting 1 minute is detected, the SECURITY lamp will light. If the fault then goes away for 1 minute, the lamp will go back off.
If the system detects a fault with the lock cylinder circuit after the engine is already running, the SECURITY lamp will light. The engine will be able to be restarted. This is called “fault enable mode”. (The system saw a good reading from the key at one point during a previous ignition cycle before the failure. So, it considers it a problem and not someone trying to steal the car.) When in fault enable mode, PASSKey protection is disabled until the problem is repaired. Once repaired, the SECURITY lamp will go out about 1 minute after the key is turned on. Fault enable mode will not shut down the engine while you are driving.
The most common problem is the inability of the TDM[BCM] to read the key pellet (lighting the security lamp). Things you can do or check:
The TDR can sometimes be at fault. It is located to the right of the glove box, next to the hatch relay. It is pinned to the metal structure of the dashboard. It is easiest to see if you poke your head under the dashboard and look back toward the rear (after removing the lower dash panel).
The TDM[BCM] does not seem to be a common problem.
What to do?
When cleaning the key, key cylinder or changing keys does not help, a key cylinder problem is likely. Either the contacts in the cylinder get worn out or the wiring in the column fails. The cylinder comes with leads attached, if replacement is necessary (some disassembly of the top of the steering column is required). Some choose to bypass the cylinder by using a resistor (aftermarket alarms often also require bypassing the key lock cylinder).
Replacing the TDR is just plug and play, but some will bypass it also. Referring to this schematic (1995), you can unplug the relay and join the yellow and purple wires together. This completely bypasses the relay.
You can also keep the relay (if it is working), but bypass the need for the TDM to operate it. Referring to the schematic, the yellow/black wire from the TDM to the TDR would need to be permanently grounded toward the TDR. Doing this only, will not affect the neutral safety or clutch switch operation. The relay will only operate when the switch is in the START position as that is the only time it would get 12v power.
If a trouble code is present (ex. DTC 46 or P1626), the computer is not receiving the fuel enable signal from the TDM[BCM]. This could be a wiring/connection issue or module failure (not a common problem as stated above). Your engine would crank, but not stay running as fuel to the injectors will be cut off. Aside from using a schematic to narrow down the problem, a bypass is also available (see below).
The TDM[BCM] modules are located under the RH side of the dashboard. If you need to replace one, a brand new module will program itself to your existing key on the first key ON sequence. A used module has a 1 in 15 chance of matching your key and cannot be reprogrammed (a BCM will also need to match the power options you currently have). You will likely have to get a new key to match the module. If you are lucky and have the key that goes with the used module, then you can have a new key made that uses it's pellet resistance and matched to the physical profile of your existing key. Without knowing the pellet value of a used module, you can try all the resistor combinations until it works or have a locksmith or dealer use an interrogator to find the value.
Having the computer reprogrammed to delete detection of the trouble code will allow fuel without the need of the fuel enable signal from the TDM[BCM]. An alternate way to achieve this is to purchase a bypass module (not the same as the key cylinder bypass with the resistor). This little module simulates the 50 Hz (30 Hz for 93's) fuel enable signal to the computer that the TDM[BCM] normally sends (you cannot merely ground the input to the computer to simulate this signal). This is what a lot of people do when transplanting an LT1 into a different car body that has no TDM or BCM. You can find the modules on Ebay (ex. Baker Electronix -sorry now closed as of May 2018) and other places or build your own with instructions found on the web.
So, you just want to get rid of the whole mess?
You must do these things if you don't intend to have any of the components operational:
You won't have to worry about bypassing the key lock cylinder if you intend to no longer use the TDM[BCM] at all for PASS-Key functions.
If you are merely having a problem with the key cylinder and want to bypass it, refer to the resistor bypass information.
Note that if your problem is related to the key cylinder and you remedy it with a new one or resistor bypass, the security light will go out. If the problem is with the TDM[BCM] and you remedy it with a bypass module or reprogramming the PCM, the light will remain on (even though the engine starts and runs ok). If you bypass everything and don't need any functions of the BCM (unlikely unless your car is stripped down for racing), removing it should extinguish the light.
Since a TDM's only function is for the security system, you can delete it after doing all the necessary bypasses and the light will go out.
The other option would be to remove the bulb for the security light.