Keywords Tools

on the window

on the pensol Toolbar setting
Click on Clear Recent search
References :

If you want to remove all the entries in your search history right now, but you still want Yahoo! Toolbar to remember your searches in the future, do the following:

Click on the Pencil menu
Select "Clear Recent Searches"
If you want to save your recent searches while you’re searching on the web, but to automatically clear the saved searches when you close your browser window, do the following:

Click on the Pencil menu
Select "Toolbar Options"
Select "Auto clear recent searches when exiting IE" so that there is a checkmark in the box next to it.
Click "OK"
If you want to disable the feature entirely so none of your searches are saved, do the following:

Click on the Pencil menu
Select "Toolbar Options"
Click "Remember Recent Searches" so that there is not a checkmark in the box next to it
Click "OK"
Note: Yahoo! Toolbar for Mozilla Firefox currently does not have the ability to disable the search history or automatically clear it on exit. Those features will be added in a future release.

If you have disabled the search history in Yahoo! Toolbar but are still seeing items suggested when you type, your browser is saving that information. For Internet Explorer, check your options under Tools>Internet Options>AutoFill. For Mozilla Firefox, check Tools>Options>Privacy>Saved Form Information.
References :
http://help.yahoo.com/help/us/toolbar/toolbar-10.html