actualy 4images already converts * into %...the problem is somewhere else...(I didnt have chance to look into it yet
)
[edit]
Just realized, in v1.7.3 this is a bug, and Jan is working on it...
As of v1.7.2 and below, this particular issue never came up, so its possible something on your end...try use fresh search.php and apply the bug fixes.
Meanwhile you can try add in search.php above
$search_word_cache[$i] = array();
This:
echo $sql;
Then search for
carol* it should show you the mysql query it used for searching, see if its correct