Novice divers.. have no clue how to effectively tow a dive flag...
The very best way is to get your buddy to tow it.. don't they teach this in dive classes anymore?
Where i dive, we generally always carry a float. There are two choices, cheap polypropalene yellow rope of 3/16 or some people use 1/8" too. We have a small light weight grappling hook on the end. What i have done to reduce the entanglement issues is to run the last 6 feet or so of the line through some clear vinyl tubing (from home depot).. Bright yellow pneumatic air line hose works too. Anyway, you tie knots on either end of the tubing/hose so it is fixed.
Here's another hint: They make these little metal grappling hooks for hanging horse stuff in a barn. I don't even know what they hang on them? However, they are very cheap, pretty damn strong and if you rinse them after use, you will lose it before it rusts too much..
It is nearly impossible to get tangled in the rope because it is held kinda stiff by the hose. I won't wrap around your first stage etc and the drag is minimal.
The other option is to use a good reel and a grappling hook. This is more expensive to get a good decent reel. If you keep the line short and taunt, it is less liely to wrap you up. for a few years now i have been using dynema line (used for kite surfing) it is more expensive, but much, much stronger than nylon cave line and much more abrasion resistant.