if someone uses the console to spawn items, then trades them to other player.. will the person he is trading to become flagged as well?
and if you put the spawned item in your shared stash.. does the next char taking the item out get flagged as well?

If im correct you dont get flagged for getting items from a flagged person. You only get flagged if you use the console yourself. And its Character dependant.

Some one help me out here...

If you use a consoled item period you will get flagged.
Trading with someone who's flagged no.

If you see someone who's flagged just don't buy anything off of them simple as that.