Meridian, all my soldiers have the US flag. I can see the ruleset only contains sprites definitions, so everything else must be hardcoded, so I don't know what I could've done wrong.
EDIT: Nevermind, apparently it only works for new soldiers.
Nationality is assigned when a new soldier is created.
Old soldiers will have nationality = 0.
You can change the nationality in the save file (attribute "nationality").
BTW do I need the Flags-orig folder?
No.
I just forgot it there when I was changing the palettes.
Also: how do I add more flags? Because some of my men don't have one. What is the order?
Flag codes are Flag0, Flag1, Flag2 and so on...
The number correspond to *.nam file alphabetical order, i.e.:
American = US flag = 0
Arabic = Egypt flag = 1
Belgium = 2
British = 3
Bulgarian = 4
...
...
Turkish = 32
If you have different *.nam files, your ordering will be different.
EDIT: new flags should have basescape palette, height max 20 (preferably equal to 20) and width max 40. I downloaded my flags from:
https://flagpedia.net/