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This article will help you with care information.

https://www.gardeningknowhow.com/edible/herbs/sugarcane/sugarcane-plant-information.htm

The flags would be the leaves on the sugar canes themselves.
This link will help you visualize the process described in the literature.

http://www.wikihow.com/Plant-Sugar-Cane

Unfortunately, your photo did not come through.

Things that can cause these symptoms include high soil pH, low nitrogen content in the soil, over or underwatering, and many other pests and diseases.

In the meantime, Here is an article that will help to give them the proper care that they require:

https://www.gardeningknowhow.com/edible/herbs/sugarcane/sugarcane-plant-information.htm

I don't see any reason that this would cause any damage. I think your idea would serve its purpose quite well, actually.

https://www.gardeningknowhow.com/garden-how-to/mulch/using-pine-bark-mulch.htm

It won't tolerate that much watering! At this point, the soil is likely infected with something. You can confirm by removing the plant and dumping the soil. It will, likely, smell of sulfur.

You will need a smaller container until the plant grows enough roots to transplant. Make sure that it is a container with holes that allows all water to exit into a saucer, which can be removed to prevent waterlogging the roots. Water, ONLY, when the soil has dried, thoroughly, down to about 3 or 4 inches.

Once it has filled the container, you can put it into a slightly larger one.

The lighting needs will, far, exceed what a window can provide, though. You will need extra horticultural lighting indoors.

Here are some articles that will help:

https://www.gardeningknowhow.com/edible/herbs/sugarcane/sugarcane-container-care.htm

https://www.gardeningknowhow.com/edible/herbs/sugarcane