You're close but you're using vBulletin 4.x so it's a little different.
In the template look for the line:
and right above or below that line add these new lines:
If you put it above the message will show up on top of the post, if you put it below it will show up under the post message, right above the signature, if any.

Thanx for the quick reply .:) ...

I get an error trying to add it right above the line with {vb:raw post.message}
Here's my current section before adding it:

<div class="content<vb:if condition="$show['first_ad'] OR $show['last_ad']"> hasad</vb:if>">
<div id="post_message_{vb:raw post.postid}">
<blockquote class="postcontent restore">
{vb:raw post.message}
</blockquote>
</div>

You seem to have a custom style but I don't know why that would stop this from working. I did it myself and it worked fine... Basically you want to make those lines into this:

If you still get the error can you copy and paste in the exact error?

woohoo - ok - it worked the second time for some reason - no error
but currently only have one moderated "thread" vs a moderated "post"

It isn't highlighted in red though
would making these changes only affect "posts" and not new moderated "threads"?

Edit: FYI ...I put it above the line {vb:raw post.message} and seemed to have no affect
though the thread while still Awaiting Moderation was already present before making the change
so maybe it only affects new messages made after the change?

That is correct, this is only for moderated posts. If you wan to see it in threads it looks like you have to edit the threadbit template, you can use the same code but you'll have to figure out the best place to put it.

damn - you expect me to actually figure something out on my own - lol
Thanks much for the help ...will post back if it all works in the end :)

It's a constant struggle to provide just as much help as I think someone needs to figure it for themselves so they can learn something along the way and one day be in a position to help others.

It's a "teach a man to fish" scenario over here. :)

Thanks for this! :)

I'm looking to implement this in Vb 4.2 and can't find the code {vb:raw post.message}
in order to highlight Awaiting Moderation posts in bold, too. Please help!

{vb:raw post.message} is most definitely in VB 4.2.0 postbit and postbit_legacy template. Use your browser's "Find on page" feature if you are missing it with your eyes.