It has been moved to Preferences ==> Searching, check/uncheck "Highlight search results instead of restricting the book list to the Results" as of calibre 1.11
http://calibre-ebook.com/whats-new:
Quote:
Release: 1.11 [15 Nov, 2013]
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Remove the button to toggle search result highlighting from next to the search bar, as too many people click it accidentally and then do not realize what they have done, despite the confirmation message that pops up. The button can be restored via Preferences->Searching
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EDIT: @BetterRed Didn't see your post.
Hey! It appears this works very differently on linux and Windows! I therefore have given confusing advice twice today!