Q:
Some Questions Regarding Certain Features
A:
Haven’t checked if the /lfg command did anything. It used to set your status to that and put the LFG icon next to your name(it was blue with the same symbol as the LFG tool).
Looking For Group in the chat settings is to control whether or not the LFG messages will show up in that tab. It is for the messages generated by the LFG tool, it is not a chat channel.
The colored icon you are referring to is a commander tag. http://wiki.guildwars2.com/wiki/Commander
It’s basically left over from before they made the lfg tool. When the game first came out you would stand in front of the dungeon with that over your head and people would invite you. Then we had a player create group finder website which people used too before the ingame tool.