Flexible DC power grids are widely recognized as an important component of building smart grids. Compared with traditional AC power grids, flexible DC power grids have strong technical advantages in islanding power supplies, distributed power supplies, regional power supplies, and AC system interconnection. In multi-terminal flexible DC power grids containing renewable energy sources such as solar and wind power, due to the instability and intermittency of renewable energy, it is usually necessary to add energy storage units to pre-regulate the power of the multi-terminal flexible DC power grid in islanded operation. Aiming at the important problem of large current impact and serious consequences when the flexible DC distribution network fails, a combined location method combining an improved impedance method (series current-limiting reactors at both ends of the line to obtain a more accurate current differential value) and a particle swarm optimization algorithm is proposed. Initially, by establishing the enhanced impedance model, the differential variables under the conditions of inter-electrode short-circuit and single-pole grounding fault can be obtained. Then tailor-made fitness functions are designed for these two models to optimize parameter identification. Subsequently, the iterative parameters of the particle swarm optimization algorithm are fine-tuned, giving it dynamic sociality and self-learning ability in the iterative process, which significantly improves the convergence speed and successfully avoids local optimization. Finally, various fault types in a six-terminal DC distribution network are simulated and analyzed by MATLAB, and the results show that this method has good accuracy and robustness. This research provides strong theoretical and methodological support for improving the safety and reliability of DC distribution systems.