Can't switch Users from Menu Bar - OSX 10.8.2 Mountain Lion

Do you have any other Status Menu items besides what you listed? Third party items can cause the behavior you describe.

To get rid of the flag, go to Language and Text system preferences, Input Sources, and uncheck the "Show Input menu in menu bar" checkbox.

Or, try holding down the command key while dragging it out of the menu. However, if some third party software is causing problems, you might not be able to do it that way.

... and this might be worth reading...

Troubleshooting a freezing or hanging OS X menu bar

Fast user switching is not as robust as it might be. The spinning pinwheel can be caused by a number of resource conflicts, these include:

application conflicts - the system doesn't like to run more than one instance of some apps, particulary if they hog resources (i.e., graphics progs). Also, running too many apps across different users can tie up your system. E.g., if you've got photoshop open in one user, you might want to try closing that even if you're not using it in the other.

file conflicts - if one user has a file open and another tries to open /access the same files, you're likely to get spinning pinwheel. Make sure your two users are not sharing the same files on a network or shared folder. If they are, log out the first user.

external device conflicts - some attached devices can only be accessed by one user at a time. e.g., cameras, scanners, possibly printers if they're not set up for 'sharing'. If one user has an app open that is using the device, you might get spinning pinwheels when switching to the other user.