Dear Henry,
Color differences on the screen are used to indicate the amplitude of the target return. This color ranges from reddish-brown which indicates a strong return to a deep blue which indicates a weaker return. You use this color variance for a few reasons. One, you can get a quick visual indication of bottom hardness by judging how quickly the bottom return goes from reddish-brown to dark blue. Page 7-27 of the operators manual shows the spectrum of colors indicated from solid return all the way to weakest. This same color scheme is used for returns that you would use to indicate fish. If you see a strong return haystack with smaller returns around it, that's what you're looking for.
The wavy blue line is the surface. If it is not being displayed correctly, ensure that you have set your draft correctly in the machine in order to properly offset everything.
Section 7 of the users manual goes into the operation and customization of the sounder in great detail. Please review that section of the manual for good orders sake.
If you still have questions, perhaps posting a picture of your display would be helpful for other to weigh in.
Fair winds!