Can't distinguish read & unread comments.

Man! You are the drupal expert. You suggest whats wrong here?

Check for $new usage in comment.tpl.php. If it isn't there, copy the tag line from garland and adjust it (would take 30 seconds). Even otherwise, you may want to pastebin comment.tpl.php so that I can suggest something decent.

Add the following to your CSS:
.comment-new {
background:transparent url(http://i38.tinypic.com/2nc4awm.png) no-repeat scroll 99% 4%;
}

:)