the first few yellow flashing cycles are done by NOLO afaik (99.5% certain about this). Charging depends on rootfs - when that's broken (BME software defect) then the device won't charge. When PC detects device as mass storage that means that USB ENUM works, and when it starts up from power-off on plugging in USB that means that USB VBUS rail is providing power to device. So your USB should be technically OK. When device doesn't enter "NOKIA" screen plus USB icon when powering it up while holding "u" key, that means your battery voltage is too low for flashing.

PS: "indicator going steady yellow for a few seconds" usually means battery is very low, since that's done by bq24150 hw charger chip - without any support from CPU - to bring device out of lowbatt-deadlock (see "emergency charging"). As soon as, by emergency charging, battery voltage went up enough to make CPU boot up, NOLO bootloader will stop the steady yellow and instead program the LP5523 to make indicator pulse yellow. This usally happens in milliseconds after plugging in USB to a powered-down device, so no steady yellow will normally be seen, unless battery is *way* too low to even boot up the device at all.

bottom line: I suspect your battery is dead, not your N900. Your N900 could use a full reflash though, to fix obscure issues with charging. To do this, you need a known-good fully charged battery.
HTH
/j