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your example works fine for me. I'll tell you what I did and try to follow along.

C-x C-f a new file, say test.txt, and copy the contents below into it:

Content-Type: text/enriched
Text-Width: 98

standard

<bold>bold

</bold><x-color><param>yellow</param>yellow</x-color>

end

Then do M-x enriched-mode and C-x C-s to save the file. Then C-x C-v RET to reload the test.txt file, and it should show you this: enter image description here

Now, I've noticed that depending on the theme the bold face may be hardly noticeable, and, if you are on a Mac, that it works better on some versions of Emacs than others (better in Macports version, for example).

If it is not working for you, maybe try dropping your init.el file, if you have one, or try another Emacs version.