My first source on the Palmetto Flag was wrong and I was wrong. Here's new info I received.
[Captain J. G. Foster’s report to General Totten on January 21, 1861 (OR, Ser. 1, Vol. 1, page 146-148). Foster is reporting on the condition of batteries around the harbor and one would assume after a careful and long study of those batteries. His report states:
“Morris Island battery.-This is the one that fired on the Star of the West...The troops for the service of the battery are quartered in the buildings constituting the small pox hospital, over one of which their flag is flying, a red field with a white palmetto tree upon it. The flag on Fort Johnson is similar, as is also the one on Castle Pinckney. That on Fort Moultrie is a white field with a green palmetto tree, and a red star in the corner.”]