On whether something is red to you:
Check the skill listed in the item description. Then check your skills (hit "l" to bring up your skill menus). If you have the skill listed, check to see your current skill level. If it is higher than the item, you will be able to use that item immediately. If it is lower than the item, you will likely be able to use the item in a few levels. For example, say I get a piece of medium armor that says the minimum skill required is 110. I check my medium armor skill level and see that mine is currently only 100.
Now if medium armor isn't even listed as a skill of mine, that means I'll *never* be able to use that item.
That's how I think it works anyway.