About a month ago I turned off syntax highlighting in vim.
And it turns out that syntax highlighting does not matter.
The code has not lost any readability.
Moreover, nothing distracts me and I can concentrate on the code, not on the highlighting.
So bravely remove or comment out the following lines from your .vimrc:
"if &t_Co > 2 || has("gui_running")
" syntax on
" set hlsearch
If you want your gvim looking like vim in a terminal, try xterm16 colorscheme.