I've looked around for ideas/solutions on these two issues without any luck.

1) I can't seem to find any documentation or advice on Search Options.

For example, can you do this: word1 AND word2 -> I can't seem to get this to work.

Or this: word1 + word2 -> doesn't work either

A list of commands, options, and examples would be a great help to users...

2) Is there a way to configure the Search Engine to display results by "thread" instead of by "post"? This would substantially slim down the list of results, so you don't have to wade through pages of hits.

Agree - there should be a search help pop-up in the search page.

7.1 includes the previously missing "(Advanced Search Tips)" -- see the Search page here.

As for displaying results by thread, I agree that search results are unwieldy when every post in a thread is listed rather than just the thread itself once... but it could be difficult if the search result occurs more than once in a thread.