The Refine Markers seems to have no effect on green flagged-markers that were created when Refine Markers was unchecked (disabled). However, if the markers were placed with Refine Markers enabled, green flags placed on unaligned photos do disappear.
To reproduce:
1. Start from any model with some aligned and unaligned photos.
2. Make sure Refine Markers is enabled.
3. Create a new marker on aligned photos.
4. Place that same marker on the unaligned photo (right-click, place marker).
After about a second, the green flag marker will disappear from the unaligned photo.