I was not aware of this problem. Frotz does support different
typeface styles (bold, italic, fixed width, and reverse) and colored
text. The only reason I know of why this wouldn't work if you had
manually chosen a default font in the settings which doesn't support
all of the styles, in which case those styles would render the default
style instead. For example, if you chose Courier as your story font,
which is a forced fixed width font, everything would be fixed width
and you wouldn't be able to tell the difference between normal story
output text and text the story intended to be fixed width.
If you can reproduce the issue and it does not to be appear to be
caused by this, please file a bug report on the Frotz issues page, and
attached a saved game and any settings you have that will allow me to
reproduce the problem. Thanks.