The focus points leds (red colored ones), looks shadowed (smudged) in my Canon 550D. Not all points, but the bottom 3 points, when the light glows, looks kind of shadowed. I tried cleaning the both the lens and the mirror, but no effect. I don't see any dust in the final output of the images. What could be the reason??
Please help.
This is due to the focusing screen, which is a small piece of etched glass above the mirror and below the pentaprism/pentamirror, is misaligned. I've had this problem a couple times with my 450D, as I've had to take my focusing screen out on a couple occasions to clean it due to some thing getting thoroughly stuck on it. After reinserting the screen, my bottom AF point on both occasions ended up exactly how you described. Sometimes the AF point will look a bit shadowed, and show a bit of a glow near the top, when alignment is particularly off.
It can take a few tries to get the screen reseated properly such that it aligns correctly with the AF point lighting apparatus. If you removed and reinserted the focusing screen, this can sometimes be due to stacking the filler plates incorrectly...they are fairly precisely machined, and should be paired exactly how they were when you first bought the camera for perfect alignment.
If you are not up to realigning the screen yourself, you can probably find a local shop that could take care of it professionally. It should be noted that a misalignment will not have any effect on your pictures themselves, as the AF point highlighting is a physical aspect of the viewfinder. It will only be an annoyance when the lights blink, but otherwise is harmless.
I don't know exactly how the red dots are produced on that model (see How are the red focus point indicators displayed on a dSLR's focusing screen?), but I'm sure that what you are seeing is an artifact of that. Possibly something is misaligned, but it's also possible that the effect is just a compromise of the design.
Is it causing an actual problem in your composition or focusing? As you note, this won't show up in the captured image. The fact that you're worried about it suggests that it's very dramatic. Do you have access (at a store, perhaps) to other cameras of the same model to compare?
It seems to me that the focusing screen is misaligned. If you remove the lens and look up inside above the mirror you should be able to tell (is the spring clip seated properly?, does it look lower at one side?) but I wouldn't recommend fixing this yourself unless you are good at precision D.I.Y.
