It seems then that the FILESTATE "selected" becomes meaningless since no files are selected outside FILESELECTS.
Files have 16 different states (all the possible combinations of Fragmented, Movable, Selected, and Processed), and each state has it's own color. SetFileColor is used to setup all these colors. Usually you will setup the same colorset for all files, but it is possible (with the FileBoolean) to setup a different colorset for different sets of files.
Setting colors inside the FileAction is not possible because the actions will change the state of the files. For example files that become unfragmented while the Defragment action is being executed. Colors therefore have to be setup earlier, before the fileactions.