I wouldn't say it's a BIG red flag, because it's certainly the case that there are good engineers out there who don't have an online presence for various reasons, and excluding them for this prima facie reason seems like a poor practice.

I don't think it's unreasonable to ask everyone to submit a code sample, and in fact I think it's a stellar idea. Provided that you make sure that they actually wrote the code and didn't appropriate it somehow, it's a really good way to ensure that they know what they say they know. However, I wouldn't hold it against anyone if they didn't have something prepared. I'd just tell them to write a relatively simple app and submit it in a relatively short timeframe (maybe a week).

That said, I'd make sure that if you're looking for something in particular, you mention it when you ask for a sample. I've been in interviews where they specifically asked for a code sample that ignored persistence and display, and later been asked to give a sample that showed I knew SQL and a UI technology. That was frustrating.