How are you getting a Glossary tab in your chm file? Do you have any type of Glossary markers in your FM content? Whenever I create a chm, I never see the Glossary tab; only Contents, Search and optionally Index if present in the FM book.
The Search functionality works fine in my tests using only the default settings for creating the output:
Are you fully patched with your FM version? There have been two patches to date and the FM version should be 12.0.2p389.