Glossary terms - where to input them - is this module working for the latest version

No - this module currently scans for occurrences of terms in a vocabulary, provides a definition of those terms when hovering over them, and links to a glossary page when clicking on those terms.
To set it up, go to administer -> site configuration -> input formats, and create a new input format which uses the glossary filter - you can choose further settings there.

Garfy, first, a small point of order on using the issues queues: Unless you are going to provide the solution, do not assign it to yourself - just leave it as "unassigned."

Is the documentation on this not clear enough? I'll be happy to work on it.

The words that are to be flagged by the Glossary module are defined as terms within the "Glossary" vocabulary. You'll find this under "Administer » Content » Categories." There you will see "Glossary" in the list of vocabularies. Next to it you will see a link to edit it.

You set up the vocabulary to define which content types will be scanned for glossary substitutions, such as "page" and "story." You also indicate if the vocabulary is hierarchical (usually not), has related terms, etc. [I recommend that multi-select, free-tagging, and required be left unselected.]

Next, you add terms to the vocabulary. You don't have to get them all at once; you can come back any time and add more.

There is no point in adding a term without a description - that's the whole point of the Glossary module.

I've not tried it myself, but from reading the description of the module it sounds like alinks (http://www.drupal.org/project/alinks) might be more suitable for your needs?

Thanks the advice. I am going to think about a way to allow external links.