Ok, so totally frustrated here. Running gvim (VIM - Vi IMproved 7.1 (2007 May 12, compiled May 27 2008 23:56:31). Have set up my .vimrc to have case insensitive search (set ic). ( No difference using .gvimrc either).
When vi'ing a file, over 50% of the time, it will only reflect case-sensitive searches. Sometimes closing current vi session, and re-opening will enable the ic option, but not always. Also trying to set it via the Files -> Global Settings -> Ignore Case does not help.
Current .vimrc contents:
set number set bg=light set ic set smartcase set autoindent set mouse=a syntax on set ruler set viminfo='10,\"100,:20,%,n~/.viminfo