I am also having a problem with the pass-key (VATS) system on my Camaro. Luckily it seems to have failed safe in that the "security" light is on steady (no flashing) and the car starts and runs normal. Been like this for a couple of years.
But when it first happened I got worried so I asked around and found a procedure to bypass/disconnect the system here:
http://shbox.com/1/vats_bypass.jpg. It's for mid-1990s f-bodies but might be close enough to give you an idea as to how to proceed. I may do it myself at some point just to get rid of the light.
Good luck.