Thanks very much for your thoughts and information. I think the Waterloo Guards were indeed from Waterloo, Alabama but it seems from posts on the Alabama Board that they did not enter service and probably fell apart as did many other Southern companies.
Getting flags for companies was indeed typical until about March 1862 when the beginnings of standardized regimental colors took root (starting a bit earlier).
With Waterloo and Lauderdale County bordering Mississippi I would not be surprised to find some Mississippi men in it. That happened in states that formed companies close to state borders - Georgia men in Alabama companies and vice versa for example.
Please do let me know what Grady Howell has to say on this. I used to see him at the Franklin TN Civil War show and talked with him each time. A fine man and historian.