No, there is in fact a torque on the system in this scenario. He's right about that, but wrong about basically everything else.
The flashlight experiences a change in angular momentum without rotating, because its mass changes and so does its center of gravity. When viewed from the initial center of gravity, the flashlight had no angular momentum before emission, but it has angular momentum after emission, because there's more mass on one side than the other after (well, mass times length, but I'm simplifying). When viewed from the final center of gravity, the flashlight has angular momentum before emission, because (again) there's more mass on one side than the other, but no angular momentum after. Either way, the angular momentum changes, due to the torque, without any rotation occurring. What you aren't allowed to do is change where you're measuring your angular momentum from without accounting for that change, which is what SDG is doing without even realizing it. And again, this isn't peculiar to special relativity, the exact same problem comes up in Newtonian physics.