Example:
My forum is not in my root www it is in a sub directory and so is this mod.
http://www.somesite.com/forums/
When you put the slash in front of the image tag it creates a link to:
somesiite.com/flags but it should put a link to where i'm uploading the files.
Hence..you lose some flexibility you either move the files to the webroot flag directory....or you change the tag to point relatively to where the flags are.
If some folks are not seeing the flags...that might be the issue.
P.S. I'm using a unix system. Looks like you might have a windows server.