Originally Posted by Mikel at Webflyer

We just finished performing some complex scientific tests (methodology = two of us logged in and out of FT while the other watched his buddy list to see what happened) and have discovered the answer to this perplexing question.

A red name signifies that a member on your buddy list has recently logged in. After a period of a few minutes or so, their name will turn to black, signifying that they have been online for more than a few minutes

We are hoping to publish the full results of this comprehensive study in the Journal of Undocumented vBulletin Features sometime this spring