Some users enocunter problem with white flags - it's an issue with using some graphic crds. However it can be fixed.

In case you have this problem (If you havn't the white flag problem don't install it!) install this patch - just unpack (for unpacking .zip you may use this freeware tool http://www.izarc.org/) and move folder Assets to the WW2 1939 folder localized in Warlords\Mods\ folder. Overwrite all files and enjoy game with full color flags.

DOWNLOAD WHITE FLAG FIX HERE:
http://forums.civfanatics.com/attachment.php?attachmentid=149364&d=1173290408

Patch works with
World War II 1939 v 1.1b and older versions

If some other problems with flags appears please post it here

I have also problems with white flags with my own mod. I have already posted this question in civfanatics. It's quite interesting: I am running civ 4 vanilla on two systems: a desktop pc and a laptop. When I use the original flag graphic it works on the laptop, on the desktop pc it is white. After converting it with dds converter it works on the desktop pc, but is white on the laptop now. After that I tried to convert it with DXTBmp (i hate this programm...) and now it works on the laptop again, but not on the desktop pc. XML seesms to be allright (I have compared it with the solutions in several tutorials). On the other hand it is hard to believe that this is a hardware issue, since both machines can show it. There has to be a hardware independent solution. These flags included in the game are running fine, so it is possible somehow...

I guess that's exactly the problem you had? Is there really no solution with one flag file?

It's connected to some cards probalby made by ATI

There isn't easy solutoin how to fix it - it's hows you notieced it's sometimes white on that pc and sometimes whit on another pc - depending on settings.

It's possible to make i working on both version but in limited way.
- you could use only two collors for the flaf (so it's completly useless for modern flags - it's good only for for flags like firaxis makes)
- one of the collor needs to be collor of the nation so for example for america is blue (the secondary is white - this white star).