AF confirmation lights - out of alignment - 350D

I don't know how much this information will help, but here goes...

On that model (and as far as I know, the entire Rebel line), the focus screen carries small stick-on reflective dots that provide the pinpoint indications. If those dots come off, all you'll get is a weak, dull glow from the general reflectiveness of the focus screen. Generally speaking, the glow will tend to be stronger at the bottom of the viewed image simply because that area is usually darker than other areas.

The focus screen could be out of alignment, or it could have lost some of the reflective dots. New focus screens are relatively cheap -- Canon part number YN2-3472-000 for the XT/350D. It used to be maybe $5 US from Canon (but the cost of shipping more than doubled that), $25-30 US from third-party suppliers, cheaper on eBay and the like. Personally, I'd order from Canon if possible.

Removing and replacing the focus screen is, in concept, a simple process. In practice, it can be a bit fiddly and a bit hard on the nerves (you don't want to scratch the mirror). Basically you remove the lens and turn the camera upside down so that it's sitting on the flash shoe. There's a spring clip that holds the focus screen in what is, for the moment, the bottom of the mirror box. The clip's got a curled lip that you can push on to unhook it, then you can lift the clip out. Right below that is the focus screen, which you can lift out (tweezers are very useful).

Some cautions:

1. Blow out as much dust as possible from the mirror box before you start dismantling. Any dust that gets into the pentaprism area after you've lifted out the focus screen will probably make you crazy.
2. Don't scratch the reflex mirror. It's silvered on the front side, where you're working.
3. Don't scratch or contaminate the focus screen. They're almost impossible to clean, and scratches will be permanent.
4. Pay attention to the orientation of the focus screen when you take it out, so you can put it or its replacement back in the correct way. There are 3 wrong ways and one right way.
5. Below the focus screen is probably a metal shim. If you accidentally drag that out, you'll want to put it back in before you put the focus screen back in.

After you've replaced the focus screen comes the most fiddly part: latching the spring clip. Make sure that all four legs of the clip are sitting on the focus screen, not hanging off the edge. When you've got it into position, be sure that you've gotten the catch fully latched. Otherwise, the first time you take a picture, the reflex mirror will dislodge the whole mess and it'll come crashing down into the mirror box.