James,
I do appreciate your reply and the methodology which you use to search...I'm sure it will help those who are unfamiliar with search and advanced search capabilities. And yes you are at a definite advantage because you live here...most like myself don't and would like to be able to find things we are looking for in a much more timely manner.
However, I have to disagree with you on Point1 and somewhat on Point2.
My disagreement stems from the fact that generally on these and all forums users are NOT SEARCHING FOR ONE WORD.
I know you and everyone can disagree. But I am willing to bet if we did a poll on this you would find it to be quite true.
Say for example I want to find information on the Random Image Rotator Module...searching for any one of these words would not produce the search results I am looking for and hence waste my time trying to parse thru 100's of posts to find the information on "Random Image Rotator Module"...think about anything else you search for and I'm sure most of the time it's not just one word searches.
Point 1, in this you state about an issue with the individual words. No matter what search engine, whether that be a website like Google or integrated like SMF, individual words are always picked up and do not generally isolate the phrase in its purist forms. This is just the way that search functions. Obviously, some may be better like Google but if you do a comparison between Google and SMF, you will probably see the reasons why.
No this is NOT "just the way that search functions" we've progressed from this (or rather should have) type of thinking...this is why Google has stayed on the top because it recognizes the need for constant change and GIVING THEIR USERS WHAT THEY NEED. ;D
Being able to search for "PHRASES" should not be that big of an issue...but because it is I can't find anything in a minute or two like we should be able...instead I've got to spend MUCH MORE TIME parsing irrelevant results due to the supreme lack of functionality.
The yellow hilight is just a petty annoyance I can live with... 
Thank you for letting me know that you use SMF (even though it's on the footer)...if this is the best SMF can do with search I know it's one Forum I will not be using. Because when you get right down to it (whether you're willing to admit it or not) this search capabilty really "sucks".
Which is probably why someone over at Joomla.org took it upon themselves to implement the capabilities of Google on their Forums.
Hopefully the powers that be here will give this some thought and consideration...and decide to change.
Thanks,
WebGuy