early 14c., "a flake" (of snow), also in Middle English "a spark of fire; a splinter," from Old Norse flaga "stone slab, layer of stone" (see flag (n.2)), perhaps used here in an extended sense. Old English had floh stanes, but the Middle English form suggests a Scandinavian origin. "The close resemblance in sense between flaw and flake is noteworthy" [OED]. Sense of "defect, fault" first recorded 1580s, first of character, later (c. 1600) of material things; probably via notion of a "fragment" broken off.
"cause a flaw or defect in," early 15c. (implied in flawed); see flaw (n.). Related: Flawing.