I am not clear on your steps. I understand the menu of format>textcolor, but what is the toolbar icon you're referencing? Setting color just requires highlighting the text and clicking the color icon on compose window OR using the menu format option, but not both. It may help if you walk through the explicit steps you take once you are in compose window. Thanks.

Change Text Color

ok, here is a 15 second video where I'm doing the steps on a highlighted text in a message composition window. Click on the link above.

Are you running Windows? I've never seen that color selection panel. Are you running any addons? I noticed that when you click a color, the font number doesn't change, indicating nothing happens when you click that color button. Let me know. Thank.

Running MAC OS, no Thunderbird add-ons

Well, it looks like a bug to me. You might try repeating the steps, but instead of clicking the 'red' button, enter #ff0000 in the font color field. That should at least give you red. l'm hesitant to report as a bug because it seems such a routine thing to do that it would have surfaced earlier. However, you can go to bugzilla dot mozilla dot org and post as a bug. I agree, it doesn't seem right.