there may be a prettier way to do this... but:
Formula:
=IF(B2<>"",IF(IF(D2=B2,D2+E2-B2-C2,D2+E2-B2-C2-(NETWORKDAYS(B2,D2)-1)*(1.375-0.70833333333))>0.166666666666667,"N","Y"),"")
will first check to make sure there's a value in B2 before running the whole Y/N calc.
as for the colors, are you familiar with conditional formatting? from the home tab, click conditional formatting, new rule, use a formula to manage rules, input the formula:
Formula:
=$L2="N"
and then select the format you want to applied in the case that that row = N...
Then, from manage rules you can set it to apply to the range $B$2:$I$30
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