I am not sure what relationship if any would be between an unregistered group not being able to view and flash not working for all if that option is set for guests. it really to my knowledge has no connection. The upload portion checks to see if a usergroup can upload and presents them with either the flash or regular upload. I know guests can not use the flash uploader thats always been the case. The flash upload is an application we include with an on off setting. We do not make that application.
What is the exact error you get?