I totally agree that it should be made more obvious when a flag has been opened against some user.
A simple "#" symbol is cryptic and only veterans of the forum will notice it. Maybe some icon that makes it more obvious to use caution when trading with such persons.

I also believe that displaying flags by default to users that have less than 7 days of logged in time is not enough.
Imo, the time limit should be raised or the display of existing flags should be made more obvious.