The release of Windows Millennium Edition, the pending upgrade to Windows 98, is drawing near, with Microsoft issuing its first "release candidate" to beta testers.

Officially Microsoft is still saying that it expects to release the upgrade, dubbed Windows ME, during the second half of this year. Issuing a release candidate is "an important milestone" to the delivery of Windows ME, a Microsoft spokesperson notes.

Beta version 3 of the operating system update, which went to beta testers in early April, contained all the planned program features, according to Microsoft. The initial beta was released last November.

Developers are working only on quality and performance improvements at this point. Among those new features are an increased emphasis on multimedia, including bundling Windows Media Player 7 and new image-editing programs.

Its Windows Image Acquisition technology accepts and manages still images, and the Windows Movie Maker provides basic video production functions. The operating system also bundles Internet Explorer 5.5, which is already available as a free downloadable beta edition.

The new OS is also features faster rendering, and includes Outlook Express, NetMeeting, and FrontPage Express, as well as expanding the browser's support for Dynamic HTML, Java, and the Channel Definition Format.

Windows Millennium also has some automated diagnosis and repair functions that Microsoft refers to as PC Health functions, and home networking capabilities that let multiple machines share an Internet connection. A new Home Networking Wizard will help with the setup process.