Thanks for the fast response @martynas_b. I have been digging in a bit further over the last few days, noting sample pdfs and webpages. My posts are based on the following objectives -
a) preserving comment order as per your comment about Zotero sidebar order
b) making the annotation and highlighting system as functional and friction free as possible
c) aiming for parity in functionality between highlighting and annotation of pdf documents and stored webpages
d) having Zotero's internal pdf reader provide at least as good functionality as other pdf readers for the purpose of annotation/highlighting
e) enabling interoperability as far as possible with other pdf readers for collaboration purposes

The Zotero version I am using is 7.0.0-beta.47+f012a348a (64-bit). I did my testing between 10.4.2023 and 10.24.2023 but did not take a note of the beta version I was using at the earlier of these dates, which is when I noticed the first 3 items. (I am using Acrobat Reader continuous release version 2023.006.20360 and PDF-XChange Editor version 10.1.1 build 381.)

1. My original post issue #1 had 3 sub-issues - I have also noticed a 4th sub-issue see (d) below
a) images get put at the top even if the image is below other highlight/notes
I am unable to duplicate this reported issue. I do not know if the beta version was updated after I originally noticed the problem.
b) Notes are misordered if highlighting only one or two words in a line of source pdf document text. [Issue 1 example 1.jpg and Issue 1 link 1 - pdf] - (I suspect this issue is dependent on the exact example selected)
c) on some web pages the highlight gets applied to the entire first paragraph as opposed to the text that was selected - [Issue 1 example 2.jpg and Issue 1 link 2 - webpage]
d) on some web pages the highlighting does not appear - [Issue 1 example 2a.jpg and Issue 2 link 2a - webpage]

2. Here are 2 screenshots showing expansion/collapse of a highlight/annotation in PDF-XChange editor (this function does not exist - as far as I know - in Acrobat Reader). [Issue 2 example 2a.jpg and Issue 2 example 2aa.jpg - Issue 2 link 1 - pdf]

3. I am currently unable to duplicate this issue. It was a type of vertical squashing of the lower text rows in the added comment in the left hand side bar.

4. Excellent news ! Any idea on timescales ?

5. The scenario in which this happened was when someone sent me a password protected pdf for my comments. The easiest way of providing my comments back to them was to mark up and annotate the document, export it, renaming the exported document to indicate that it had comments inserted, and send it back to them, with the same password.

6. Great ! Given you are fixing this, although the resizing of the box to reduce the text font size is very innovative, it might be worth testing alternatives such as clicking to add the box, typing the text, setting the font size, and then the box would resize automatically, that resizing being "tweakable" though the adjustment points on the box.

7. Here is a screenshot example of a document I highlighted and annotated in PDF-XChange, and read in Acrobat Reader. In both PDF-XChange and Acrobat Reader, you can use the comment subject field to put the highlighted text, so - at least in PDF-XChange - it appears approximately like a standard left hand sidebar comment on a pdf in Zotero. (Even a whole paragraph of text fitted when I tried it.) [Issue 7 example 1.jpg in PDF-XChange, and Issue 7 example 2.jpg in Acrobat Reader, Issue 7 example pdf.pdf sample file]

It would be nice to be able, as a preset option, to put the highlighted original text into this subject field, but I have no idea whether this fits with the usage of that field as intended by the current PDF standard (https://pdfa.org/sponsored-standards/).

8. "Again do you have an example of other pdf viewers doing something similar". There is no pdf viewer out there I know of that does this. As I mentioned, this is a feature that could do with some discussion. It would be very easy simply to file this suggestion in the "too difficult" category, nevertheless, it seems that there is some value in the comment from the referenced source. My suggestion was mainly for visuals, as a color highlight is easier to see at a glance than emboldened or underlined text. The two readers I use do not have this facility - and I wish they did.

The main implementation issue would seem to be compatibility with existing readers, and if this is implemented, there would probably need to be some kind of translation routine when exporting a pdf so that the comment text can be converted and read. (I know of no current mechanism in any other reader to do this.) As I am writing this, it strikes me that the main priority is to provide a color visual for the benefit of the annotator rather than for collaboration purposes, but of the color options that come to mind,
- text color
- underline color
- highlight color
the second most readable option in my view (behind highlight color) would be the underline color - tests can be done with sample documents to see what happens when this type of pdf is read by another reader. It might be a whole lot easier to modify this suggestion to provide instead a facility to change the annotation underline color (and set a default underline color). The underline facility in comments text is present in Acrobat Reader's sidebar and hopefully that does not represent a problem to implement. PDF-XChange does allow for underlined comment text, but seems to display it only in the callout from the highlighted body text. Adding color to the underlining in comments text looks spectacular - see Issue 8 example 1.jpg which I mocked up with a graphics program.

Perhaps the main pdf standard makers will jump up and down at the mere suggestion of bending the standard, but I think it is undeniable that the feature could be of use to some people. As are comment tags. Perhaps this discussion should be hived off and put into a separate thread (as it may have implications for the pdf standard itself), so it can be kicked around a bit ?

N.B. Acrobat Reader converts all highlight colors (which display correctly in the main document body within reader), into a comment in the right hand sidebar with a blue stripe at the left of the comment. In PDF-XChange, the comment colors are displayed correctly in the sidebar.)

9. Where the file type in the Zotero main pane is a web page, I would still like the ability to annotate it and then export it as an annotated pdf, and to receive responses from others, and integrate them somehow into the library. (issue added)

10. (Issue added) There is a wrinkle in text management when there is a hyphen at the end of a line of highlighted text. Some hyphens should be removed when the highlighted text breaks a line and the word appears in mid-line of the text in the top of the highlighted text in the sidebar, but sometimes this happens when a pair of words are intended to be hyphenated - Zotero still removes the hyphen. [Please see screenshot Issue 7 example 1.jpg left sidebar evidenceinformed should read evidence-informed.]

All of these issues are small individually, but if addressed as a group could make a substantial difference. These suggestions are not exhaustive, and there may be other annotation/highlighting aspects that I have missed. All the examples and links have been provided to you by PM and should be in your inbox - thanks very much for the comments. As a newcomer here I hope this is OK for forum protocol !

1.b. This is a bug and we'll fix it.
2. Highlight/underline text collapse/expansion was recently fixed, but I'm not yet sure if this is already in the beta. Normally it should expand the text once you click on it.
10. This is quite difficult to fix, but'll try to do that in future.

@martynas_b thank you
>> to receive responses from others, and integrate them somehow into the library. << this last part of Issue 9 also relates to pdf documents

Please consider issue 8 request to now be modified to something that is probably easier -
a) Add the facility in the left hand pane added text to be able to underline text as well (currently Bold, Italic, Superscript and Subscript). This is compatible with at least PFD-XChange and Acrobat Reader.
b) Add the facility to change the underline color and set a default underline color (or leave the default as the last selected underline color) to be tested with various readers for compatibility

What is your opinion on Issue 7 ? This would seem to be compatible with the current design of the left hand sidebar in Zotero 7 beta ? Some solution like this v important for collaboration .....

And what is your view on Issue 5 ? - for most of us I think the % of password protected documents we receive and comment on is probably very small

Link now provided to @AbeJellinek

(Apologies - comment above - Issue 1 should read Issue 3)

@martynas_b
3) Yes, done ! see Issue 3 example 1.jpg and Issue 3 example 2.jpg To reproduce get a web page with a lot of text, paste into Word, print using Microsoft Print to pdf driver, add to library, open the document, select and highlight some text, add lots of text in a comment, and you get Issue 3 example 1 - then close the tab and reopen, and you get Issue 3 example 2
7) highlighted text was originally Issue 8 in the original post - the issue 7 I was asking about in my post above is
" 7. Here is a screenshot example of a document I highlighted and annotated in PDF-XChange, and read in Acrobat Reader. In both PDF-XChange and Acrobat Reader, you can use the comment subject field to put the highlighted text, so - at least in PDF-XChange - it appears approximately like a standard left hand sidebar comment on a pdf in Zotero. (Even a whole paragraph of text fitted when I tried it.) [Issue 7 example 1.jpg in PDF-XChange, and Issue 7 example 2.jpg in Acrobat Reader, Issue 7 example pdf.pdf sample file]

It would be nice to be able, as a preset option, to put the highlighted original text into this subject field, but I have no idea whether this fits with the usage of that field as intended by the current PDF standard (https://pdfa.org/sponsored-standards/). "
(Whether this is done is perhaps a question of how highlights and their annotations can be exported together.)

Issue 8 - the original post request to be able to highlight text within the comments text added to a highlight, is not on the cards now, I see from your post above. However, I modified this feature request 8 (see https://forums.zotero.org/discussion/comment/448342/#Comment_448342) to become - to be able to underline text within the comments text added to a highlight, and to change that underline color. (Currently, this type of text can already be modified with Bold, Italic, Superscript and Subscript options, and underline is already an option within Acrobat Reader). This would be brilliant, and works very well visually - see Issue 8 example 1 (this should apply equally to Webpages and PDF annotation - workability for PDFs subject to export/import compatibility with other pdf readers

@dstillman the issue thewalrus.ca (the firefox element at least) is the same as Issue 1(d) in my post https://forums.zotero.org/discussion/comment/447510/#Comment_447510 - I don't know if you have seen this thread yet, but there are a few areas where some policy input arising from this thread could be very useful, and a few other webpage related issues are here which might capture your interest (I have sent you a private link to the file examples and links) ..... btw the more I use this 7 beta the more I like it ...... thanks to you and the dev team! This is getting tantalisingly close to being a work of genius !