In the latest version of Google Desktop for Windows, you'll notice a new dialog that presents a list of features and lets you select the ones you want. Google Desktop enables by default the sidebar with gadgets, but the search feature is limited to filenames. To actually search the full content of your files, you need to enable the "enhanced search".
The desktop search application added gadgets in the subsequent versions and was renamed to Google Desktop. "Google Desktop is a new, easier way to get information – even without searching. You can think of it as a personal web assistant that learns about your habits and interests to identify and present web pages, news stories, and photos that it thinks you will be interested in," explained Marissa Mayer the shift.