On p314 of the PHB it defines threaten as "to be able to attack in melee without moving from your current space." So by that definition, it's threatened.
However, right below that for threatened square it says "Certain actions provoke an attack of opportunity when taken within a threatened square". If the guy cast a spell, the flat-footed character (assuming no Combat Reflexes) wouldn't get an AoO, so it's not a threatened square.
DM's discretion. If you think about it logically, flanking is really in the mind of the flanked character. Does he consider the two characters enough of a risk that he's dividing his attention between them? The flat footed character is a second or two away from being a threat, so I'd say he'd be dividing his attention.
If I was running the game, I'd call it flanking.