White: Common, usually vendor trash
Yellow: Uncommon, not really rare but sometimes these are decent.
Purple: Rare, usually always a good item that can be valuable.
Teal (perhaps green based on your settings): Extremely rare and highly valuable.

I've never seen a green tagged item in the game, so I'm guessing you either have modified your settings, or my monitor just likes other colors.

The BoE/BoA items have no color coding to distinguish.

Maybe by green he means quest items. These are of course bound to you and have a dark green background. If you forget what they are for you can mouse over them for the name of the quest they belong to. Also some crafting materials have a green background like Large Warg Tail, or Decrepit Wight Skull, etc. etc. Those are used to improve critical success rates when crafting.