Google has released Google Desktop - search for your Windows desktop. Results are presented in the traditional Google fashion using a web page but the data does not traverse the Internet. GD indexes common files such as Word, Excel, Powerpoint, plain text, HTML, and Outlook mail. GMail is not currently integrated.

Because of the presentation method it is a sure bet that AdWords will be integrated into the search results page real soon now.

See the announcement here.

Get the code from Google here.

Read a review at Search Engine News