LOL! No it doesn't! Thank you for pointing it out.
I installed the Desktop Search, and soon came to the opinion that it was a load of rubbish. It just wasn't finding any useful documents. in fact most of the time it was just pulling documents from my browser's cache!
Now after reading your post I've realised why. Google just indexes the C drive. So all it's doing is indexing my Windows drive. All of my documents and backups are stored on seperate drives.
I can't believe that google have taken it out of Beta. That has to be a major flaw!
They really should warn users about this when they install it. I wonder how many other people saw the useless results it was returning and just assumed that it was a useless program?