You can check the frequently asked questions section for more information on what started the Civil War, but if you are looking to write a paper on this, which I assume is a high school/freshman college level paper, here a few books I can recommend for you:

Kenneth Stampp ed., "Causes of the Civil War"; David Potter, "The Impending Crisis"; Eric Foner, "Free Soil, Free Men, Free Labor"; James McPhereson, "Battle Cry of Freedom"; Gary Gallagher, "The Union War"

As to your second question, the answer to that is bit more murky. People display the flag for a number reasons. Some of them are outright racist displays, others because they want to honor their Confederate ancestors or associate the flag with some modern day political issue. There are doubtless many who see the flag as racist despite the context, but I tend not to essentialize peoples motives without knowing them.

You are right that most Confederate flags that you see are not representative of what were primarily used during the war. The Confederate nation had a national flag that underwent two additional changes. You can google "Confederate national flag" to see them. The battle flag was also square shaped, in contrast to the rectangular shaped Confederate flags that you are more likely to come into contact with today. These rectangular flags are more similar to Confederate navy ensigns that would fly on Confederate ships.

There are probably some books on Civil War memory that you can look into if you want a more scholarly appraisal of the use of the Confederate flag. This is not my area of expertise, so you might want to start with David Blight, "Race and Reunion."