We've talked about this periodically in the past but I happen to come
across something that may definitively decide the matter.

I was checking SERPs from my Webmaster Tools Query Stats page and saw
the following search string, "php cookie decode".

Going to the SERPs for that search string, I see in the results, which
you should be able to see at http://www.google.com/search?q=php%20cookie%20decode&hl=en
that "php" and "cookie" in the URL of cass-hacks.com/articles/
discussion/js_php_cookies/ was/are highlighted.

Even though "php" and "cookie" are tied together by an underscore and
even though the "cookies" in the URL is a multiple of the singular
"cookie" being searched for, Google did recognize them.

Similarly, in the second indented entry from my site, "decode" in the
URL of cass-hacks.com/articles/discussion/js_url_encode_decode/ is
highlighted as well.

Of course the SERPs listings shows other instances of those search
terms in the listing for pages from my site but that it also
highlights those in particular shows that Google seems to no longer
care about whether a hyphen or an underscore is used.

So, it would seem the question in the subject line of this thread is
no longer an issue!  Yay!

But .... they actually do this for combined words as well, eg
http://www.google.com/search?q=search+watch+page+200 -- notice how
they highlight within the domain name?

I like how they kept the search for underscores working, check out:
http://www.google.com/search?q=js_url_encode_decode
vs
http://www.google.com/search?q=js_url_encode
but
http://www.google.com/search?q=js+url+encode

John

Right, I had noticed that also in different searches. In these
searches specifically though I was thinking that it finding "cookie"
in "cookies" was a singular/plural thingy but it may have been a sub-
string type thingy or, it could have been both.  :-()

Interesting!

The first and third I would have expected but the second one, I
wouldn't have guessed the underscore parsing was that intelligent. I
like that!!

Craig