She may believe her story. The American GI (if there was one, they aparently never married) perhaps told a tall tale to impress the then young lady. In any event, it was probably from a real Nazi flag during the war. A Soviet flag would have been just as good.
There were quite a few SOE agents in the area mentioned. It is possible the officer was in the OSS. If so, they were in areas few people knew about. The story may have happened, just the location was different. It is only recently, that the SOE released any type of records at all. A lot of records are still sealed. I would imagine it would be the same for the OSS. The Governments of the US and England still does not want to put all the information out there.
Read the whole article. It says he died of pneumonia 4 months before they were to be wed.