What kind of prompt issues do you have? I've set my Emacs up so that each shell has a prompt in the form name:directory> where name is the buffer name and direc

What kind of prompt issues do you have? I've set my Emacs up so that each shell has a prompt in the form name:directory> where name is the buffer name and directory is the current directory, and both name and directory are in different colors, and it all works well. As far as colors go, shell mode does its own highlighting. I used to have problems with ANSI code colors, but they have been working properly recently. (I just tried ls --color=always which worked as expected, unexpectedly.) Which version of Emacs are you on? Note that this is all without any configuration. The only thing I did was add a command for opening a new shell in the current directory which turned out to be extremely useful. It even works for remote files, so now I use shell mode for almost everything.