I encounter this way to much. I choose not to use them when they are not green.
My answers for what they mean:
Orange Arrows: They're losing to much and don't feel confident about they're driving so they don't try hard enough due to thinking they'll just lose anyways.
Blue Arrows: They win all the time so now they're over confident about themselves and don't try as hard because it's too easy for them. (I have experienced this and tested it using green arrow drivers in an X1, the result is a blue arrow.)
That's what I think, either way, it effects they're driving in certain ways.
Orange Arrow: Drives to slow and usually can mess up. As in letting understeer take over, or simply not cornering well and hitting a wall. Also orange arrow gives the driver the skill of a Level 5 or lower.
Blue Arrow: Lowers they're ability to pass other opponents. This is very difficult to work with for they struggle to pass anyone.
Now with one of my drivers I had experienced a new arrow. One of my drivers went beyond an orange arrow and had a complete downward pointing RED arrow. Now I bet upwards is purple. But I haven't seen it yet.
To fix this, if you have anyone on your team who's a greeen arrow, race with him a lot but make sure not to coach him to much so it's a challenge for him. After even 1 race or multiple races, usually take 3 or more, other drivers will go back to green.
That is what I know and I hope it helps you. I hope this helps a bit.