Those files are strange indeed. I don't know if this is what you did, but you simply could rename your flag files from *.dds to *.bmp and then upload them here. This way the files will pass the civfanatics' "file check". After downloading your files I could then rename them back to dds. However, I took a look at your files with dds converter and GIMP, finally I included them into my mod and tried them out in civ4. Dds converter was unable to display the images at all, but at least it didn't crash. GIMP opens both files without problems. That sounds good, but actually it isn't if those files were meant to be dds files with alpha channel. In this case GIMP should have imported something weird (because the import script isn't working perfectly I think). In GIMP both of your files look identically. Both contain an alpha channel, which is good. But the alpha channel is white in the channel view (should be black there) and in the alpha threshold menu the threshold value is 127. There, you should set it to 255 and export it to dds. All your channels should become black then and the image itself will turn into a grey-white squared plain, that's normal. That's why I wrote you should make a bmp backup of your file first for the case you'd like to make changes to your flag later. Also, it may be that your system wants to have the file without alpha channel. In this case you could later open the bmp backup, simply remove the alpha channel if there is any and then export it as dds. Just to have it complete: currently your flags both appear plain white in the game. As my secondary colour is white, that could be the same effect you have encountered on your system. It would also make sense as in case of bicolour flags the alpha channel controls which parts of the flag should be painted in the primary and which should be painted in the secondary colour. It does that by assigning either a white or a black alpha channel to the pixels making the complete alpha channel consisting of black and white areas only. If the alpha channel is completely white, it could be that the secondary colour is assigned to the complete flag, ignoring the original image informations of your flag.
If these files weren't your final flags and you think your dds should be fine, please upload them again (using the trick I mentioned above) and I'll have a second look at them.
If you still have problems with the dds plugin for GIMP, let me know. Then I'll have a look at this in order to help you installing them. I hope the plugin is Vista compatible...
I also had a small search for Civilization 4 under Vista. I found a civfanatics thread with a bunch of Vista problems, but more related with starting the game at all. However, if there is still a problem with your files, you could try to update the drivers of your video card. I could imagine that its Vista driver is buggy. But in this case you are taking the risk that civ4 doesn't work for you at all anymore as it seems that can happen easily under Vista.
BTW: If you want I can fix the flag for you, but it would be in your interest if you would learn the procedure for the case you are makin another mod in future (of course this suggestion is only of interest if your dds are really buggy).
EDIT: If you found something is unclear in the tutorial, or even confusing, just let me know. I'll then do my best to correct this.