As a moderator, I would have chosen a different rejection reason:
Using standard flags helps us prioritize problems and resolve them faster. Please familiarize yourself with the list of standard flags: see What is Flagging?
Using a standard 'recommend closure' flag makes a question entering the Close votes review queue, where regular users with close voting privileges sort them out. ♦ moderators are not needed in this process, but they are the (only) processors of custom flags. In that way, the rejection reason you got makes sense too.
As @CodyGray pointed out, the question was already closed when you submitted the flag. You might not have been able to see that, so that's not your fault, but if you had tried to use a standard flag, it would not have been possible to submit it. But it does explain the rejection reason: the question was closed, so there was nothing to do for the moderator.