I updated OpenERP v7 today to the latest and it looks like the indexing is working now. at least it is from the Knowledge module. Does anyone know if I can search indexed content from other modules as well?

Yes, OpenERP indexes documents. According to the documentation: Supported File Formats

The OpenERP document management system can index the following file formats:

TXT : text files,
PDF : PDF files,
SXW : OpenOffice V1 files,
ODT : OpenOffice V2 files,
DOC : Microsoft Word files.

if you do not know where a specific document can be found, OpenERP also has a search tool integrated into its document management to simplify your search. To search for a file, use the menu Knowledge ‣ Documents ‣ Documents. You get to a document search view that lets you search amongst all the attachments and all the documents in the FTP server.

I do not know if search supports wildcards or not, maybe you can try it out.

I can't get it working in 6.1 also. I have somewhere seen you need to install some extra software. But I didn't test it. I have written more details in my own post which I posted earlier with this question:

"How to automatic index in document management?"