Geshi does not detect libraries on Drupal 7
The files should be copied, for example, in "sites/all/libraries/geshi" or "$config/libraries/geshi," where "$config" is the directory containing the settings.php file used for the Drupal site.
In the first case, the class.geshi.php file is put in "sites/all/libraries/geshi/class.geshi.php," and the "geshi" directory that is in the downloaded archive is put in "sites/all/libraries/geshi/geshi."

As for where the Libraries API module looks for the directory containing the library files, the documentation comment for libraries_get_libraries() reports the following text:


  Returns an array of library directories from the all-sites directory (i.e. sites/all/libraries/), the profiles directory, and site-specific directory (i.e. sites/somesite/libraries/).


The site-specific directory is the one that I reported as "$config/libraries/geshi."
The module doesn't look in "sites/all/modules/libraries."