Orange Battery Light Flashing - Question

Hello,

Any help here would be greatly appreciated.

I have a Vostro 1500 laptop that is 3 years old. I have RARELY used the computer without being plugged into the power outlet, so there has been what would appear to be very little wear and tear on the battery. I am intermittently getting the battery light (to the right of the keyboard) flashing orange.I read something that Dell said about how there should be no decrease in the life of the battery if you have the computer plugged in to the wall socket all of the time (I do). But, they also say somewhere else that the batteries' usual life expectancy is 1 year. BTW, I did NOT get a message on my monitor telling me that the battery is running low. These are my related concerns/questions:

1) Aside from possible loss of data in the case that the power goes out, is there any reason that I NEED to keep this battery in -- can I just use the AC power source?  (I read something long time ago about how the computer needs the battery in to operate in general, even while plugged in to wall socket?)

2) Is there any harm to the computer or my data or my external hard drive (FreeAgent GoFlex) by continuing to use the computer (battery in it) as is with the orange battery light flashing now and then?

3) Could this flashing orange battery light mean anything but my needing a new battery?  As I mentioned, I did NOT get a message on my monitor telling me that the battery charge is running low.

Thank you for any help with the above!

Juniper