The ‘Show sidebar icons in color’ preference does not seem to recognize custom icons assigned to externally mounted volumes. I have given my internal iMac drive (the startup volume running macOS) a custom icon. I have also given two of my external drives (mounted over USB) custom icons. But only the internal drive shows its custom icon in the sidebar—both of the external drives show the generic mounted drive icon.
I also have this same problem. It’s been like this for a long time. I have a lot of external drives with many volumes and they are all gray except for the internal drive. No fix yet