Google Desktop is a very useful tool.  If used incorrectly, there are potential security and privacy risks.

In any version of the Google Desktop software, make sure to carefully analyze which 'Search Types' are enabled in the 'Indexing' section of 'Preferences'.  Do you really want the Google Desktop indexing 'Password-protected Office Documents' or 'Secure pages (HTTPS) in web history'?  Probably not...

In the most recent version (Google Desktop 3 Beta), Google Desktop introduces the new "Share Across Computers" feature, which enables users to store Web browsing history, Microsoft Office documents, PDF and text files on Google's servers and enables the ability to allow a user to run remote searches from multiple computers.

Recently, a nonprofit foundation called Electronic Frontier Foundation said this new feature is a serious privacy and security risk because of the way a user's data is stored on Google's servers.

Bottom line from CyberNoggin:

1. As with any tool, understand what it does and thoroughly read the Privacy Policy.  If you're not comfortable with it, don't use it.

2. If you are going to use the tool, don't just click a button and enable a feature if you don't understand what the impact is.

This new funcionality could be very useful to a large number of people, but make sure to use discretion when storing anything on internet attached machines: Protect personally identifiable, financial, or sensitive data at all costs!

~ CyberNoggin.com

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