There are 3 related highlight settings in Tools / Options / Environment / Fonts and Colors
If I move onto a variable with the cursor then all references become highlighted using (A). If I move away from that place to a neutral area (for example end of line after a semicolon) then the highlighted texts change colors to (B) and (C) correctly.
I would like to see (B) and (C) coloring while I am on the variable with the cursor.
I tried to turn on and off many things in Options and Visual Assist Options, but couldn't find any good combination. Searching the Internet hasn't helped (at least yet).
UPDATE
"Productivity Power Tools" came into play. I will post an answer for reference for other users in distress.
Productivity power tools has a conflicting option group on the Tools / Options / Productivity Power Tools / Other extensions page, namely "Match margin options". It has two options (Show matches in the margin, Show matches in the editor). Both needs to be unchecked.