Skimming a bit, it seems I'm not alone on finding this part confusing.
To clarify, I think Cold War should be laid out a little more like Evolution theory, with the system checks written on the flowchart lines rather than inside boxes.
So, this wound up being more confusing than I thought (and I was 90% done when I realized there are FIVE branches off Cold War, not four, so pardon the sloppiness!), but here's my take in greater detail (S is Shizune, HL is Hanako/Lilly, and TF is training flag):
(Edited after previewing: Argh, forgot this format doesn't work in forums. Pardon the field of periods used as spacers.

)
....................................................... ________________________
............................ ___________Cold War_____________................\
.........................../.............../............\..................\ ..............|
..........................V..............V..............V.................V..............V
....................(HL=2).......(HL=1 & S=1....(HL=1 & S=1......(S=2..........(S=2
.................../.................& TF=1)..........& TF=0).......& TF=1).....&TF=0)
................../.......................|.....................\............|.............|
.................V........................|.......................\..........|.............|
Paint by Numbers__(TF=1)_> Exercise <____________|______/..............|
...........\.........................../........\..................|........................|
..........(TF=0)....................V.........V.................|........................|
.............\..............Take It Easy...Go for It etc..../.........................|
..............\.................../.....\......................../..........................V
................\..............(S<2)...(S=2)____________/______________> Home Field Advantage
..................\............/............................../
...................V.........V............................./
...............Mind Your Step <________________/