Why did Gawain continue to wear his green lace sash when he returned to King Arthur's court? What did the other members start to wear green themselves when they heard the story?

1. This relates to the story of Sir Gawain and the Green Knight. After Gawain rode in order to find the Green Chapel and face the Green Knight he stays at the castle of the local lord who proposes him a game. He will give Gawain what he caught that day and Gawain was to give him whatever he won that day. On the last day lords wife gives Gawain a green sash that will make him invulnerable and he will need it if he is to survive the meeting with the Green Knight. He withholds this from the lord. Gawain thus breaks his promise and it serves as a reminder of his failure to uphold the knightly ideals. This is why he decides to wear it, as a reminder of his failure.

2. After his fight with the Green Knight, who turned out to be the lord Gawain stayed with, he recounts the tale of his ordeal to his fellow knights. He explains them the importance of the green sash as well. They laugh but agree suggest they begin wearing them for his sake. It is thus through the ages seen as the symbol of honor.