This is a good question, the content-search widget is intended to only search content from within the group selected. Therefore you will not see content created in projects or any other groups.
Ok thanks John!
I am hoping to accomplish the same thing. Is there any way to have the search widget include content within projects that are stored in the group? Alternatively, can the "watch a tag" widget return content from within projects? If not, can you make any other suggestions on how to do this?