Ideally, you season every step along the way. You've heard about "layering flavors," that's not only the prime example but the prime opportunity.
The judges were half-right and half full of it. Had the chicken been adequately seasoned with salt and pepper they never would have complained. But when you compare foods which are both at the proper seasoning level, the one which has been seasoned in layers will taste better.
Don't take my word for it. Try it for yourself.
With fried chicken, if the choice is to season the raw flour or the chicken, season the chicken. But better to season both. You can actually better include herbs in the flour than directly on the skin, unless you're using a very fine ground rub.
I certainly don't mean to question anyone else's experience, but I don't have any problems with the salt disappearing from the flour.
I make a seasoning blend and adjust the strongest flavors so that the flour isn't overseasoned, but you can see the seasoning in the flour. It helps to use paprika not only for its taste but its visibility.
With all fried food, it's best to slightly underseason for the cooking process and hit the finished product with some salt and pepper (or a spice mix) just as it comes out of the fryer. Hot, fresh, fried food embraces seasoning in a particularly wonderful way.
When I use a liquid as part of the breading process for fried foods, as in buttermilk-flour, flour-egg-flour, or some other liquid... I find that some hot sauce adds quite a bit of depth to the final flavor.
Remember, that if you're going to season three or four times during the process that several of the seasoning can add up pretty quickly. So take it easy in the beginning.