I didn't see in the article where the courts ruled in his favor. I saw where he reached a settlement with the city. He got a paltry $4,500, which probably didn't cover the cost he incurred in bringing the suit.
He can show all the Confederate flags he wants on his own time. But in my opinion when he parks in the city lot, at (presumably) taxpayer expense, the city can ask him to take off the flag if they want him to.
According to an article in the Houston Chronicle dated April 21, 2006 the courts certainly DID rule in his favor! An excerpt states: "A federal judge ruled previously that Carpenter's constitutional rights had been violated, but that he was not entitled to compensation because he had not fully pursued damages against the city's civil service system." Here's the link: http://www.chron.com/disp/story.mpl/ap/nation/3809587.html