I get completely different results for these tests, which I've summarised below (thanks to http://www.tablesgenerator.com/).

These are exactly the results I would expect, logged in as a normal (student) user, searching for another normal user who has set a display name and a preference to hide their real name (where applicable).

However it has occurred to me that, since 'Search usernames' has no effect if 'Never display usernames' is enforced (and nor should it, as you pointed out above), perhaps these two settings would be better combined into one. What do you think (and if you agree, what do you think it should it look like / how should it be worded)?

+-------------------+------------------+-----------+---------------+------------+---------------+------------+---------------+------------+
| Users can hide RN | Never display UN | Search UN | DN searchable | DN visible | RN searchable | RN visible | UN searchable | UN visible |
+-------------------+------------------+-----------+---------------+------------+---------------+------------+---------------+------------+
| /                 |                  |           | Y             | Y          | N             | N          | N             | Y          |
+-------------------+------------------+-----------+---------------+------------+---------------+------------+---------------+------------+
| /                 | /                |           | Y             | Y          | N             | N          | N             | N          |
+-------------------+------------------+-----------+---------------+------------+---------------+------------+---------------+------------+
| /                 | /                | /         | Y             | Y          | N             | N          | N             | N          |
+-------------------+------------------+-----------+---------------+------------+---------------+------------+---------------+------------+
| /                 |                  | /         | Y             | Y          | N             | N          | Y             | Y          |
+-------------------+------------------+-----------+---------------+------------+---------------+------------+---------------+------------+
|                   | /                | /         | Y             | Y          | Y             | Y          | N             | N          |
+-------------------+------------------+-----------+---------------+------------+---------------+------------+---------------+------------+
|                   | /                |           | Y             | Y          | Y             | Y          | N             | N          |
+-------------------+------------------+-----------+---------------+------------+---------------+------------+---------------+------------+
|                   |                  | /         | Y             | Y          | Y             | Y          | Y             | Y          |
+-------------------+------------------+-----------+---------------+------------+---------------+------------+---------------+------------+
|                   |                  |           | Y             | Y          | Y             | Y          | N             | Y          |
+-------------------+------------------+-----------+---------------+------------+---------------+------------+---------------+------------+