You are correct. From the help documentation:
"Conditional formatting does not appear in Instant Web Publishing."
Sorry, actually it is from the IWP Guide.
It doesn't work at all????
That can't be right because I have conditional formating in my database that works in IWP. The difference being that the formula is comprised of text or number fields.
I only know what the documentation says. I have never used CF in a solution intended for Web publishing, simply because I didn't want to spend time on a feature only to have to do it some other way later.
Given how IWP works, it makes sense to me that CF would not be compatible with it.