Ok, I finally got into the game and I can't figure out how the scanner works. When I hit T, it greys or or colorizes a small icon by my character art or whatever ever it is called; much different from what everyone else says. So what am I doing wrong?

There was an update to the scouter system just over a month ago, so a lot of the guides about using scouters are out of date. You can now use your scouter by first making sure it's turned on(colorized icon), and then simply clicking on whoever you want to scan. This will display their power level and some other data around the selected character.

What about the Yellow chip everyone is talking about. The Scouter merchant didn't seem to have another tab.

There are no chips in the game anymore, so whatever functions a scouter has depend entirely on the scouter rather than the upgrade chips in it.

No, there's no chip system anymore.

Now, I have a problem of equipping my scouter. Once I took it off that was it. *Poof* I haven't been able to use it since then. And "then" was Friday XD.

That's pretty strange. I'm assuming you've tried right-clicking it while it's in your inventory? Also, in case you don't know, they've changed the way scouters work so you no longer go into a first-person view when pressing 'T'. Pressing 'T' will still turn your scouter on/off but you just have to click on the mob/npc/player you want to scan while the scouter is turned on.