I have all trackbacks held for moderation and also have added many common keywords to the spam lookup "keywords to junk" list, but I still keep getting trackbacks that do not automatically get junked. For example, even though "ambien" is in the "keywords to junk" I still get trackbacks with that word in them and they are not automatically junked.

I added the words to the system wide plugin settings. So I have to add them to the blog specific plugin settings (which do appear to be different from the system wide settings) and if so then what good are the system wide settings at all?

Each blog uses either its local keywords, or the system wide ones, but not both. So if you've ever edited the keywords locally on a blog, the systems ones no longer have any effect on that blog.