Then the most likely possibility is that the automatic template edits were not able to work due to customisations you've made on WHOSONLINE or whosonlinebit templates (very likely if you have a heavily customised style).
However, if your country names are showing up, then it's obviously managed to make these changes.
The only thing you can do now to examine the source of the page (i.e. check the HTML output) for the who's online display. Each cell should contain something like this:
HTML Code:
<td class="alt1"><img title="Switzerland" style="margin-right: 3px;" src="images/misc/flags/ch.png" alt="Switzerland">Switzerland</td>
You should see the img tag in there, along with the relative path (relative to your forum directory) for the image. Is the problem that the img tag is missing from this cell, or that the path to the image is somehow wrong? If this doesn't resolve the problem, then please paste in just the cell (as I have done) for your page.