How do I block http://www.site.com/porn but not http://www.site.com/kids?
Add http://www.site.com/kids to your whitelist. This will allow that particular site (and all addresses "under" that, like http://www.site.com/kids/games) to be visited, but not any other site on that particular server.

Why doesn't distance off whitelist work for search results?
Because search engines are built around the ideal of linking to every site on the net, they cannot be considered trustworthy enough to only link to sites that would remain appropriate within the limits of off-whitelist browsing.

What does the "Content Filtering Suspended" image mean?
This indicates that your Safety Settings window is open. When the Security Settings window is open, all content restrictions are lifted. This warning is a simple reminder that you need to close Safety Settings before allowing your child unsupervised access to the computer.