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Here is the options I can set in the admin panel:

This option controls how threads and forums are marked as read.

1. Inactivity/Cookie Based - once a user has been inactive for a certain amount...

Can you please log out, close the browser and log back in. Has this made any difference?!

I think that icon shows even if there is 1 unread thread in the entire forum?! Its based on session timeouts at the moment.

I have been in contact with vBulletin and changed the settings to a...

Can you guys please attach a screen shot if possible?

Are you talking about this icon:

http://www.javaprogrammingforums.com/cb/statusicon/forum_new.gif ?

Hmm.. Thanks for reporting this guys. I know this has been an issue in the past. The forum software is 100% up to date so I have no idea what's going on?!

What browser do you all use?

I will...