<blockquote>
<p>but then the dialog is getting big and wordy</p>
</blockquote>
<p>I think <code>"string" was not found from cursor</code> is more accurate, and that wording also works for <em>Find Previous</em>.</p>
<blockquote>
<p>The default button should indeed be [Find] (not Cancel).</p>
</blockquote>
<p>I agree here, if the user wants to cancel the dialog they can press escape.</p>

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