If you would like to highlight a row initially, you will need to get the HTML element of the row and set the className to the hightlighted style. Here is the update snippet if initially you wish to hightlight the first 3 row:

function WebCombo1_OnShowDropDown(controlId, left, top, width, height) {
    var combo = ISGetObject(controlId);

    if (combo.GetSelectedRow() != null) {
        combo.GetSelectedRow().nextSibling.className = combo.GetSelectedRow().className;
        combo.GetSelectedRow().nextSibling.nextSibling.className = combo.GetSelectedRow().className;
    }
    else {
        setTimeout(function () {
            var contElem = combo.ResultBox.document.documentElement;

            if (!IS.ie)
                contElem = combo.ResultBox.document.body._e;

            var rows = contElem.getElementsByTagName("tr");

            if (rows.length > 2) {
                rows[0].className = "WC4-SR";
                rows[1].className = "WC4-SR";
                rows[2].className = "WC4-SR";
            }

        }, 15);
    }
}

I am using the BindObject.aspx provided sample for my test page.

I just recieved an update on the bug report, a fix will be available in the next hotfix release.

I just recieve an update in the bug report, a fix for this issue is scheduled in the next hotfix.

based on my analysis the issue only occur in IE when using XHTML page. A bug report has been submitted for the issue.

In the mean time, since the row is already created but still use none as the display style, you could use a workaround to show the hidden row. You will need to manually set the row display style to "" during LoadGroup AfterResponseProcess event handler, here is the snippet:

function WebGrid1_OnAfterResponseProcess(controlId, actionName, lastRequestObject, xmlResponseObject)
{
	var WebGrid1 = ISGetObject(controlId);

	if (actionName == "LoadGroup" && IS.IsXHTMLDocType() && IS.ie){
		var childRows = WebGrid1.GetSelectedObject().GetRowElement().parentElement.nextSibling.getElementsByTagName("tr");
		for (var i = 0; i < childRows.length; i++) {
			childRows[i].style.display = "";
        }
    }

	return true;
}

Did you mean you wish to format the grid row layout using row template as shown in this sample?

As far as I know, GUI formatting is provided when using Expression Blend 4, Visual Studio 2010 GUI formatting is still lacking compared to Expression Blend.