TLFi goes with the later etymology with the presumption that flavus already had “tired” as secondary meaning (flavescere, “wilt”).

As far as I understand the etymological discussions (which I always find hard to do in the TLFi), the shift from “soft, wilted” to “blurry” may have come through the visual arts, where flou became some sort of technical term at some point (TLFi cites 1676) to describe soft shifts in color (i.e. dégradés). From there the shift in sense to “blurry” is pretty easy to achieve, and from the visual to the metaphor of blurry ideas is straightforward and seems to have been achieved by the time of Diderot, judging by the quote.