On 2013–03–01 Alasdair McAndrew wrote:

> Do I have to include a special module here?

No. I tested some versions between 2011.11.29 23:11 and 2013.02.26
00:17 and it worked for me. Which version are you using?
\definehighlight is nothing which was recent added.

\setupbodyfontenvironment
  [default]
  [em=slantedred]

\definehighlight
  [slantedred]
  [style=slanted,
   color=red]

\starttext
  foo {\em bar}
\stoptext

You cannot update, you can try this instead of \definehighlight:

\definealternativestyle
  [slantedred]
  [{\slanted\color[red]}]


Marco