I am a level 42 and have yet to see any rainbow items and I've visited all the hidden traders and the like. What am I doing wrong? I just want one little rainbow colored something so I don't feel like I'm being discriminated against. PLEASE! Anybody know what I'm doing wrong?

First, welcome to the forums and don't get discouraged!
Keep on killing! Rainbow drops are pretty random.. you can get 5 in 20 minutes or 1 in 20 days, it all appears to be random. Try boss farming more. The more loot you have the better "chance" you have to get rainbows! As far as the hidden vendors, Rainbow Sally and Rainbow Sam are rare. You'll see plenty of KC and Yellow/Purple versions before you see a Rainbow version.

And definatly try to run on insane. It does not guarantee a RB drop, but the higher loot percentage means more chances to get one.

Try to get into boss farming parties of 5 to get a 1150% more bonus to to loot. This doesn't guarantee rainbows, but it definitely ups your chances.

It's more luck than anything. At your level, you could be running Rotgut with others.

Good luck!

I got my first at level 16 for one character and around 45 with another so, as ForT2007 said, it's really random. Depends a lot of your playstyle too. Bossfarming is good. Or why not some HDoL on raised difficulty too.

They have a great page on TheTownstons with how often mythics drop.

I have the weirdest luck with rbs, mostly bad. But on four occasions, I've farmed full group for more than an hour with no luck -- log off, come back later, set to normal for solo questing, and instant rb on my first mob.

Go figure...

Thanks everybody. I finally saw my first rainbow today! I feel so special now! I was beginning to think something was wrong but perserverence has paid off. Now if anybody knows how to defeat that stupid Abadon guard in the cleft the searing knight I'm all ears/eyes!

You don't. Abby will just revive them (2 times) if you kill them so just beat Abby, grab some loot and throw a Turkey-Leg for his foes to play with as you move on to looting the treasure-chests. Abby really is a boss for groups since he's really hard even if we're many who solo him, mostly lvl 100's though.

I liked the challenge of killing all of them each time I go. I kill the mage two times, then the guards and finally Abby. Granted, if you are farming, speed is better. However, I have made a point to be able to solo insane every boss I have come across. I still have not done so with Abby. The last time I was able to play, I think I was up to "extreme".

Now, you can't really start to acquire RB's personally until reaching lvl 15 correct? And then the initial levels are lvl 10 and up for the RB items at that point I do believe. Please correct me if I am wrong. Currently lvl 12 and can't wait to start getting RB drops.

Yup, after lvl 15 they start to drop. Well, the chance will be there at least. It depends on how much you farm and mostly pure luck if you'll get one. Got my first at lvl 45'ish with one char and 16 with another.
I think they'll go as low as lvl 10. Seen lvl 11 or 12 personally only.