I have some pale turquoise highlighted text in one of my older documents which has a dashed-border around the highlight. I cant remove the highlight in the usual fashion. If I delete the text and start typing in the same place it comes up with an outlined highlight. What is the function of this outlined highlight (which has turquoise colour, black dashed outline) and how do I remove it or set it up if I need it again?

That is a “Preserve Formatting” field, from the sounds of it. It is used to protect the formatting of the text inside of the box, for when the compiler is set to modify the text formatting on export (so a way to do things like block quotes and such). To get rid of it, select the whole range, and use the Format/Formatting/Preserve Formatting menu command.