Is it the tailcap or the driver causing my issue?

Today I received (from DX) my new Ultrafire W501B with a red Philips Luxeon K2 emitter. It has 1 mode only. The slightest contact with the rear push-button causes the light to flicker. A solid click turns it on/off. Does this suggest an issue with the tailcap or is the emitter?

As an aside, I notice the output flickers a little bit on its own. I have set it down on a solid surface, then turned it on and watched the beam against a white wall. In about 3 seconds the power flickers and drops about 20 - 30%. It may or may not flicker up or down again on its own. Kinda worried it might burn out.

Is it foward or reversed clicky? I've had problems with foward clickies that flickers quite often. If it still flickers with as a reverse clicky, you might want to check the connection to the battery if they sit snugly or rather loose. A good connection will be if the springs are compressed when tightening the cap in. You'll notice some resistance when pressing in the cap before tightening.

rear clicky. Battery feels snug....

Forward or reverse clickie doesn't mean switch location. It's rather the operation of the switch itself. Do you have to press the switch until it clicks and then let go to get output or can u just soft press (before the click) to get it to momentarily turn on? Check the ring that holds the spring in the tailcap to ensure its not loose, tighten if necessary, also make sure that it's not cross threaded(un tighten and re tighten with ease). If all that checks see if u can check the driver for tightness also. Look for any improper solder joints(cracked, loose... etcétera).

Ahhh. Ok! To turn it on, I press and then have to release for light to come on. But to turn off, I press in and it goes out.

It has a brass plunger type tail cap spring assembly. Seems like it is working right, nothing seems loose. The driver looks good, good solder joints. I undid everything, put it back together. The light will still flicker if I exert a small amount of pressure on the switch. I am nowhere near applying enough pressure turn it on/off bump just bumping it a tiny bit. Not a huge deal as I don't intend to be bumping it while using it but just worried it suggests something is loose and could fail.

Something like this?

yup, that's it

Prob a loose connection, tighten the switch up, and tighten the pill.
Short the switch with a paperclip or something. if it still flickers, it's not the switch. Check this thread.
http://www.candlepowerforums.com/vb/showthread.php?227518-LED-Troubleshooting-guide-(budget-lights)

Well since everything in that flashlight before the emitter is theoretically in series we need to troubleshoot each part that can be defective. First take the tailcap off and use a piece of wire or something similar to take the place of the switch(from batt- to the body of the flashlight...probably the threads are the best spot) and see if the light comes on and functions properly or your problem still persists.
Have you taken the tailcap apart yet? Mine has a spring(inside the brass pin... Which is actually a tube) that just kinda loops around a metal tab that's attached to the switch and isn't actually soldered or permanently attached so that would be a very good place for a lose contact to cause flickering.
I use a pair of twizers that have a slight point on the tips to remove that ring, makes it easy to place in the two holes and with the other hand turn the tailcap.

It's your clicky switch. I've had this with some of shinningbeam's switches. I have no idea how to fix this ordeal except replacing a whole switch. It's a little hard to switch because you need to find the thread pattern, diameter and dept of both switch and your tailcap.

Tiresius
The switch itself can be bought and replaced if determined bad and not a connection issue(which in this case I'm close to positive it is a loose connection somewhere) and not need to change or buy the whole tailcap so no need to worry about threads. Plus that route would be much cheaper.

I've always run into tailcaps with the whole assembly together. None of them have a separate board that is held by a retaining ring.

Looking at the picture, you can easily change the switch itself without changing the entire unit.