You each have four flags. The first flag is black on one side, red on the other. The second is black on one side, green on the other. The third is white on one side, red on the other, and the fourth is white on one side, green on the other. (In other words, one side is black or white, the other side is red or green.)
The flags have the peculiar property that as soon as they are exposed to enough light to see what color they are, they burst into flames. So you can look at one side of a flag, or the other, but you can never see both sides of the same flag.
You and your (entangled) friend each choose a flag. The alien observer observes the following:
1. Your choice of flags, considered independently of your friend's choice, is indistinguishable from random. Likewise, your friend's choice of flag, considered independently of your choice, is indistinguishable from random.
2. Nonetheless, if the alien looks at the black-white side of both flags, they are always the same. Likewise, if he looks at the red-green side, they are always the same.
Could it be that spooky action has underlying causes that we can't tell yet? For example, reusing the flag metaphor- you and your friend decide to MAYBE wave a flag every day at 1200 GST, and then in practice it happens that every sunny day you both wave it (because hey it's sunny, everybody likes to go outside) and on rainy days no one does (because it's warm and dry inside in your house).
An alien with no knowledge of meteorology and our reaction to it observing this would always observe that either both flags are waved, or both are not, in a seeming random matter, where in fact it is not random at all.
That's my understanding of entanglement, but I get the feeling it's a wrong view.