How can I apply colors to my servers name?

When you're in the text entry field for your server name, hold down CTRL and a little box with some color swatches will pop up. Click one of them to change the current text color.

I'm running dedicated though. A friendly Redline guy told me it's via (1) or (2) in the conf so I'll give that a shot.

One way to do it is this :

Start your normal version of LFS, click "Start New Game" and enter the name of your host, with colours.

Then exit LFS. Open the file cfg.txt and search for the line starting "Game Name".

Then you can copy that text and add it to your dedicated host's setup.cfg file.

Alternatively just use the colour codes manually ^0 to ^8.

^ + 1=Red, 2=Green 3=Yellow 4=Dark Blue 5=Pink 6=Light Blue 7=White 8=Black

eg:

^1my ^3host^6server

would show as: my hostserver