That's correct, but I'd add one thing: you can only wrap keywords in the exact form they appear in the entry. If you want them to be searchable in a different form (eg, "Steve Smith"), specify them in the value attribute instead:
Code:
<idx:entry>
<idx:orth value="Steve Smith"/>
<idx:orth value="Jeff Smith"/>
<idx:orth value="Smith"/>
<b>Steve and Jeff Smith</b>
...
</idx:entry>