You need to be working in HTML format.  And the signature file needs to be in HTML.  You
should create it in Notepad as it needs to be less than 4 KB.  If you create it in Word
and save in HTML format, it may be too large as Word puts in all sorts of unnecessary
code.

Here's some sample code:

<DIV><FONT face="Times New Roman"><FONT color=#ff0000 size=4>Bob</FONT>
is different than the rest</FONT></DIV>

OLEXP: How to Insert an HTML Signature in Outlook Express Messages
http://support.microsoft.com/?kbid=170968
OLEXP: Image Is Not Displayed in Your HTML Signature File
http://support.microsoft.com/?kbid=230648