Malignant Cell was originally called Cancer Cell. It was a Death creature, but Eclipse made it insanely powerful, so Zanz made it a neutral creature (the name change was for aesthetic purposes, to divert the attention away from real-life terminal illness). Flooding wasn't even in the equation until much later. When Flooding was in development, a combo deck was built that abused Aflatoxin + Flooding, reaping the benefits with Graveyard + Condor. The opponent would have a field of cells that would multiply (and die immediately), which would, in turn, produce skeletons that would die the following turn. The Condors would grow to astronomical proportions, and there was pretty much nothing your opponent could do to stop it. Because of this, Zanz nerfed Flooding so it doesn't kill neutral creatures.
That's why Malignant Cells aren't killed by Flooding.