Highlighting search terms is done via the modes.php file in your template set. For example:

; <?php /*

[html]

content_type    = text/html
filter 1        = "body: saf.Misc.Search"
;filter 2       = "body: siteglossary.Terms"

; */ ?>

Then you just style the highlight insertions the way you want via CSS:

span.highlighted {
    background-color: #ff0;
    padding: 2px;
    padding-bottom: 0px;
}

For more information on output filters, see the tutorial on template modes here:

http://www.simian.ca/index/news-app/story...