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Check 'Tools | Options | Trees | Show item flag icon in tree' and restart UR. Then to change an item's flag, click on the item's flag icon (or dot, to the left of the item icon) in the tree, and select a flag value in the popup menu (or use Shift+R, Shift+G, etc.). The flag icon changes to match (as well as the text color [as long as 'Tools | Options | Grids | Use flag colors for item text color' is also checked]).
You can also right-click -> Flag -> color or tear off the Flag drop-down menu (drag the top header of above None) as a toolbar and place it near the tree.
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