does the car continue running when the theft light is flashing, or does it die after a few seconds?
I had a theft problem with my '96 also, about twice a week i'd go to start it and the theft light would flash, it would start, then die after about 2 secs. I'd try and start it again, theft light wouldn't blink and she'd start right up.
turned out I had a PATS key going bad, would intermittently work, I replaced my key with a new one and haven't had a problem for over a year.
just my situation.