Combine own stream with flagged user
The problem lies with your contextual filter. It is set to filter the uid of flag user. This means it will limit the selection to only flags made by the current user (who did not flag himself, thus the user's own content is not selected). 

You can probably solve this by having each user flag himself (automatically), but that is kinda ugly.

The alternative would be to use two regular filters and an OR group (remove the contextual filter). You might have to add some additional relationships if below steps do not work, but we basically want to have relations from the content to the user (author) and from the flag to the user (I believe you added that one already).

Add the filter user: current and select yes twice! For the first dialog, make sure you select the author relationship from content to user. For the second dialog use the flag to user relationship.

Finally, from the dropdown button above the filters section, select And/Or Rearrange and Create two groups with Or between them:



Now make sure to place one of the filters in each group.

This should show all content where the author is the current user, or content where the author has been flagged by the current user.