Google surprised everyone in 2004 with the release of Google Desktop, a desktop application that let computer users search the contents of their PCs as easily as they searched the Web. Google ups the ante with Google Desktop 2.0, a significant upgrade that includes a heavily customizable sidebar for bringing Internet content straight to your PC, along with better filtering for searching your photos, e-mail, and documents. We gave the latest version a whirl to see if the improvements are as good as the company claims.

Google Desktop 2.0 installs quickly. Indexing your system, however, takes quite a bit longer, and happens, at least initially, while your system is idle. So while you can get started with the Google Sidebar right away, your computer will need an hour or two of alone time (with you not working on the system) to index your system before you can run local searches. After that, Google updates the index in the background as you're working, so Web sites you visit and e-mails you receive are available almost instantly for searches. On our admittedly fast AMD Athlon 64 3500+ test machine with 1GB of RAM and a 7200 RPM SATA drive, we didn't notice much of a performance hit. CPU usage fluctuated between 2 percent and 8 percent while the machine was at idle. The same system showed fluctuations between 0 percent and 5 percent at idle without Google Desktop loaded.

Version 2.0 can search across old MSN Messenger and AOL Instant Message chats. In addition, the entire search index can now be encrypted using the Microsoft Windows Encrypted File System (EFS) under Windows XP Professional. As before, Google Desktop works with both Microsoft Internet Explorer and Firefox, something MSN Desktop Search still can't boast.

The default sidebar—more or less a series of stacked windows that pop up over your task tray—contains a number of useful items, such as an e-mail box that can work with Gmail, Microsoft Outlook, Thunderbird, or any other mail client you choose, news from sources such as Forbes and Business Week, a scratch pad, a continuously cycling thumbnail window that displays photos from your "My Pictures" folder, and a weather outlook for your zip code. The Web Clips window automatically picked up RSS feeds from Web sites that we had recently visited. (You can turn off autocapture.) Finally, the ubiquitous Google search box resides at the bottom of the sidebar. You can also bypass the sidebar interface in favor of two smaller, search-box-only options: the Deskbar, which stays in your taskbar, and the Floating Deskbar, which you can place anywhere on your desktop.

As you type characters in the search box, results begin appearing in a pop-up window. You can filter the results by clicking on "Web pages," "e-mail," and the like, and it will bring up the appropriate results page. These look just like Google search pages, so the interface is familiar. Clicking on an Outlook e-mail brings up the contents of the e-mail in the browser. It doesn't fire up the Outlook application, which means you can read the results instantly (even if the formatting looks slightly different in the browser window from how it would look in an actual Outlook window). You still have the option, however, of viewing the message in Outlook. Also, if you use Google Desktop 2.0's integrated Outlook toolbar, you can search for e-mail and read the contents directly in Outlook. As with Yahoo! Desktop Search's integrated Outlook searchbar, Google's search results are not real-time and can only be launched by hitting Enter.

If you're a news hound, you can enlarge the Web clips and news feed portions of the sidebar, and minimize something else you're not as interested in (e.g. stock quotes), or vice versa. Unfortunately, although Google Desktop adjusts the news items it shows you based on your surfing habits, there's no way to configure them yourself. In addition, recent e-mails (from Gmail, Outlook, and so on) appear in the sidebar. In our tests, Google Desktop was able to find recently received Outlook messages within seconds of their appearance in our inbox, matching the company's claims.

Using the new Quick Find feature, we were able to bring up an application just by typing a few letters of its title in the search box—it's certainly faster than navigating to the application through the Windows Start/Programs menu and even beats Microsoft's anticipated operating system update Windows Vista, which will offer an embedded search box in its new Start menu that lets you search for program names. Google Desktop still doesn't index the contents of ZIP files like Yahoo! Desktop Search, though it can, of course, locate the archive on your hard drive if you know its name. It will then find ZIP archives files that match your queries, and a simple click will show the files' contents in Windows XP. Also there is a plug-in that will let Google Desktop index ZIP files. You can download it here.

As in version 1.0, the Google Desktop API allows programmers to develop new tools that take advantage of Google Desktop. With the final release of Google Desktop 2, for example, developers can now program Sidebar panels using script languages such as VBScript and JavaScript. In addition, Google now provides developers with an automatic plug-in installer. We particularly liked the Sidebar panel for controlling iTunes (a WinAmp version is also available). For more information, there's an active developer community and forum located at http://desktop.google.com/developer. Third-party development has taken off since the Google Desktop 2 Beta release back in August. You can search for available plug-ins at the following link: desktop.google.com/plugins.

Other notable pluses include the use of advanced Google search operators and the ability to thread e-mail searches into conversation views. One interesting addition for the final release version is a Sidebar panel for Google Maps. When the computer is sitting idle, the Maps panel cycles between different areas of the world such as Bratislava, Slovakia and Athens, Greece. Once you click on it, an expansion window will open up that lets you scroll around in real-time using a click-and-drag interface.

It's fun to play with, though it can be a bit distracting while you're working. It's tempting to start exploring Cairo, Egypt when the opportunity flashes by in the rotating slide show. Click the search box underneath the map and things get interesting (and more useful). From here you can type in any location you want and bring up a map, right inside the panel. Google Desktop 2 also scans the web pages you're reading and brings up relevant local maps. While surfing Circuit City and Barnes and Noble, the correct map appeared instantly in the sidebar when we clicked on the store locators and typed in a zip code.

Other upgrades in the final version include enhancements to Google Desktop for Enterprise, mainly on the administrative and large-scale deployment side. Using the new tools, a large company can route call center data from one of their internal enterprise systems to a Sidebar panel, while employees can search their own accounts, the Internet and the local Intranet all in one place. It's useful for small businesses, too; a web site could, for example, track AdSense statistics with a Sidebar panel plug-in. Unfortunately, Google Desktop doesn't support Macs.

As a desktop search utility, Google Desktop generally stands almost level with Yahoo! Desktop. Both automatically index new and changed files and e-mail, and search Outlook contacts, tasks and notes. However, Yahoo! Desktop Search still benefits from its X1 roots, with support for over 300 file formats. Yet Google's no slouch. It can, for example, preview and index PDFs, which the other key competitor in this space, MSN Desktop Search, cannot do without a plug-in. Google Desktop also has wider support for search-while-you-type than MSN Search. It uses it in all the main locations—the Sidebar, the Deskbar, and the Floating Deskbar—while MSN can only search-while-you-type in its own Deskbar.

For purists, Yahoo! still offers a better desktop search tool, but Google Desktop 2.0's sidebar offers a compelling new way to navigate both your own computer and the Internet. It's a step closer to a tantalizing future ideal where the desktop interface would disappear entirely, and anything you wanted would be available immediately with a few keystrokes or mouse clicks. Google Desktop doesn't take you all the way there, but it makes finding things on your computer both faster and easier.

You can download the Google Desktop 2.0 client here.