I figured out part of the problem is that some of the links were in library items. Since those are locked for editing within the HTML, the link checker must not be able to highlight the text within the code. (Or else it IS highlighted, but since the text is already highlighted in yellow, the highlight is "invisible".)
Nonetheless, I'm still having lots of links that won't highlight. My workaround is to double-click the file with the broken link to open it, then use the Find box with "source code" selected to find the offending link. It should be easier than this, but at least I found a way to fix my links!
I am having the exact same problem. I also am using the find and replace process as a work around.
There must be some preference setting that is causing the problem.
Can someone at Adobe offer a line of investigation?
Thinking that the problem might lie in the realm of access permissions, I tried to fix the same broken links when logged-in as administrator. No difference. The "link fixer" still does not work.
I also tried to use the "link fixer" with the cache NOT enabled. Continued failure.
I re-instated "enable cache", forced a re-cache. Continued failure.
This same problem was reported in a discussion called "What is a broken link for Dreamweaver link
checker" started in 11 jun 2008.
No one ever suggested a cause or fix.
It works to replace erroneous GIF files with other GIF files. I am not sure if the new files were in the same directory as the source file (the file containing the erroneous link). It always fails with JPG files (erroneous links to JPG and JPG as the replacement).