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Odd that you get those results.
It probably has something to do with how your version is working with a non0Adobe PDF (it was made with Corel) but I'm not sure what. When I search for "tax", I get the correct results (the word "taxes in the second bullet point on page 3).
If it is working for you, can you tell me what version of Adobe Reader you are using?
I'm using 9.2.0 on both Mac and Windows.
You appear to be correct about the cause:
When I try find/search on this PDF - http://www.taxes.state.mn.us/taxes/property_tax_administrators/other_supporting_content/20 09258%20Fact%20Sheet%205%20%281%29.pdf it works correctly and it is produced by Adobe Distiller 8.1.0. However, the problem is still occuring with non-Adobe PDFs and I now noticed that find/search seems to be correctly finding the term (i.e., it doesn't find words when they are not present and does when they are). The problem seems confined to the incorrect highlighting of the terms.
However, I am confused by the fact that other people with Reader 9.2 are not reproducing the same issue or what I can do to resolve the problem.
Should I reinstall?
That'll be a tough one to track (at least for me).
I've even tried in Mac Preview and it works properly.