Users shouldn't have to guess or scrub the page to find out where they can click.
underlining is essential if you use link colors such as reds or greens
underlined links are important for low-vision users' accessibility
Don't underline any text that's not a link
There are two exceptions to underlining links
When using a navigation menu the user must click and point to get it to open so it is understood that it is a link. The underlining becomes just extra at that point.
When there is a list of links the user usually knows that they are links. They usually reside on the far right or left of the page. Because it is understood that these are links they don't need to be underlined. It doesn't mean that you can't
Common Sense is the biggest indicator of whether or not you should underline your text.
Coloring Text
Shades of blue provide the strongest signal for links. This doesn't mean that you can't use other colors. If a better color fits better on your site then use it.
Use different colors for visited and unvisited links. This allows users to know what sites they have used so that they don't keep going back to the same site over and ove.
Application
Recognize your audience
so that you can know how to organize your links. To older people you need to make the links bigger and easier to find.
Understand that others may not be able to navigate your site as well as you. Having others look over your site may be able to give you good and positive feedback. Others may see things or have ideas that you wouldn't think about.
Make it as clear and simple as you can. You don't want people to have to spend too much time looking for your links. Make them easy to navigate.