However, Wittgenstein is not criticizing Malcolm just for supposedly having wrong factual beliefs, but for mere willingness to use probabilities about beliefs and behavior of people that are conditional on their nationality.
This is not evident in the quote you talk about. Malcolm didn't use probablities, he called it "impossible". He didn't merely condition his guess partly on the nationality, he seems to have based it entirely on said nationality and on nothing else.
Do you know of any act, no matter of how great charity or barbarism that is so incompatible with "national character" that you can find not one person of that nation willing to commit it?
Do you know of any act, no matter of how great charity or barbarism that is so incompatible with "national character" that you can find not one person of that nation willing to commit it?
That is not the relevant question here. The relevant question is whether we can think of acts that are so incompatible with the "national character" that it would be inconceivable (i.e. p~0 can be assumed for all practical purposes) that any institutions of a given country's government would commit them, although such acts have been committed by governments in other places and times. The answer is obviously yes.
Here's the new thread for posting quotes, with the usual rules: