Google Desktop does use indexing, but only starts indexing when your not using your computer for 30 seconds.
Plus I would believe Google knows how to search
Wikipedia on the indexing:
After initially installing Google Desktop, the software completes an indexing of all the files in the computer. And after the initial indexing is completed, the software continues to index files as needed. Users can start searching for files immediately after installing the program. After performing searches, results can also be returned in an Internet browser on the Google Desktop Home Page much like the results for Google Web searches.
Google Desktop can index several different types of data, including email, web browsing history from Internet Explorer and Mozilla Firefox, office documents in the OpenDocument and Microsoft Office formats, instant messenger transcripts from AOL, Google, MSN, Skype, Tencent QQ, and several multimedia file types. Additional file types can be indexed through the use of plug-ins. Google Desktop allows the user to control which types of data are indexed by the program.
One unfortunate aspect for users with large hard drives: Google Desktop only indexes 100,000 files per drive during the initial indexing period. If you have more than 100,000 files in a particular drive, Google Desktop won't index all of them during this initial period. However, Google Desktop adds files to your index during real-time indexing when you move or open them.