Shooting in low light with a canon rebel xt
Please keep in mind that when shooting in low light, you will ALWAYS get some amount of blur when you are hand holding the camera unless you use a flash. The only way to increase your shutter speed is to crank up your ISO setting to 800, 1200, 1600, etc. If there is no tripod handy, brace yourself against a stationary object and remember to keep your elbows tucked down near your body when shooting (no sense in holding up your arms, too).
There is no way to increase the ISO limits of your camera while maintaining quality of your images. And once again, you will ALWAYS get a certain amount of blur when hand holding the camera.
The external flash not firing is an entirely separate issue. This could have to do with your metering, a bad flash, bad connection in the hot shoe, what shooting mode you're in — the possibilities are numerous. The next time your flash doesn't work, write down all the settings of your camera and keep track of them (i.e. shooting mode, metering mode, flash settings, current lighting situations, etc.) You may start to notice a pattern and perhaps we can help you here.
Anyway, happy shooting, and if this response was helpful, please rate it! Thank you!