Search > Find should always search for SELECTED text as default, but it SHOULD NOT search for text at cursor (not selected) - it's typical Windows standard for applications (Word etc.).

Currently I can set the "Find text at cursor" option in Tools > Settings > Editor settings, but both options (on or off) work in wrong way! With the option ON it searches for text at cursor (even if nothing is selected) and with the option OFF it doesn't search for selected text

Personally, I don't like any of these methods, since all of them occasionally act when you don't want them to, overwriting my search text in the process. On the Mac, the standard is to have an Enter Selection command (keyboard shortcut cmd-E) that sets the currently selected text as the active search string; so you can find a selection again with a simple cmd-E followed by cmd-G (Find Again). BBEdit improves on this by searching backwards if you hit cmd-shift-G, and it has a dedicated Find Selection command that can similarly be used to search forward or backward for other occurrences of the current selection with just one keystroke. (There's also a keystroke--cmd-opt-E--to set the *replace* text, so you can do many search-and-replace operations without ever opening a dialog.)

In general, I would absolutely *love* to see the PhpED folks take a good, hard look at BBEdit's search facilities, then redo the IDE's to match. BBEdit is by far the gold standard for this--on either platform--and using it as the benchmark for a redone search facility for the IDE would take the IDE from being only moderately useful to being the very best Windows has to offer. In general, I don't expect the IDE's editor to hold a candle to something like BBEdit or TextMate, but since searching is one of those things I do all the time while programming (as I suspect many other programmers do), matching in this area would definitely be good.

I vote with Nataniel because Visual Studio works that way and Visual Studio is the gold standard of IDEs. PhdEd is an IDE, not a text editor. Also, every other tool I have works that way.