Yellowsocks -
Gun laws - there's a bunch of 'em and they are interwoven to the point where there's a lot to keep up with, but with regards to your Colt question, it basically it boils down to this:
Certain guns (including the AR15) were classified as "assault weapons" by the Federal Government in '94. Those weapons are still legal to own and transfer (from a Federal perspective) as they were grand-fathered in.
After '94 the gun companies "sporterized" their guns (i.e. removed things like the bayonet lug, grenade launcher, etc.) so that they could circumvent the ban. These "sporter" or "post-ban" guns are what are being sold by Colt (and others) now and are perfectly legal to own (again, from a Federal perspective).
Since state/municipality laws vary, although these guns (both pre-ban and post-ban) are legal to own from a Federal perspective, they may not be legal in your particular area of residence.
Hopefully this clears things up a bit.
For more detailed info, here are a couple of links regarding the legalities involved with your purchase....
NRA State-by-State guide
ATF Firearms section
(big download link)
ATF "Green Book" - firearms laws in detail
BTW, the federal "assault weapon" law, imposed on Sept. 13, 1994, will expire on Sept. 13, 2004, assuming it isn't renewed.
Regarding the Colt specifically, they make a nice rifle. You can also get a "new" FAL sporter (put out by Century Arms) - or even a G3 (i.e. HK) or CETME (G3 precursor) They are viable options if you're interested in .308 instead of .223 (although you can get AR's in .308 as well - but not from Colt)