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Enhance the taskbar
A couple of tips and applications to change the look and behaviour of different taskbar area's:
 
General
You might also completely "rebuild" the taskbar... Shake-it lets you rearrange the button, systray and notification area in any way you like (free, Win 9x/NT). This app acted kinda wild on our machine, maybe it doesn't coŲperate with Tclock very well. Beaker noticed it doesn't do a good job with Panekiller also.

Then, MyDesk adds a little icon in your systray, easy shutdown etc options, set wallpaper, hide/unhide desktop icons, but most remarkable, hide all or just parts of your systray (clock/tasks) and taskbar. Free and XP compatible.

Start Killer removes the startbutton from the taskbar (thanks Red).
Want some transparancy for the taskbar (yeah, 2k/XP only...), use:
  • For a live fading taskbar, Start Bar Fader (does some more wanted items).
  • Or use (for a plain transparancy) Tclock 2 (doing a huge amount of other desirable stuff too :).
  • Also there's TransBar to take care of this.
Or get rid of the taskbar with Starter (free, Win 9x), but leave the startbutton there, with any bitmap on it you'd like...

And, "with Taskbar Control you can check the items on your taskbar you want to show, and uncheck the items you want to hide (e.g. hide the systray or the start button)." Works only in Me for now.
Quicklaunch area
Now being able (since IE4) to add shortcuts to the taskbar, use this wisely. You might add a shortcut to your screensaver, so you can start it when yÚu want. A shortcut to the registry editor may be useful also.

On the Shortcutting syntax page you may find some shortcuts to put in there too.

Since we're concerned with decoration, use some icons that look good in 16 x 16. The best being, ofcourse, by Etherknot, Scrow, AiconZ and Dark Project Studios!

Most icons here can just be changed by rightclicking. Want to change the "show desktop" icon too (?), then go to x:\Windows\Application Data\Microsoft\Internet Explorer\Quick Launch\, or for win 2k/XP x:\Documents and Settings\"your identity"\Application Data\Microsoft\Internet Explorer\Quick Launch\ and move the .scf file to another folder. Make a shortcut to it and place that in the Quicklaunch folder instead - now a rightclick will do.
Or, easier (and thanks Aruvam), open the .scf file in notepad (shift + rightclick, or drag it onto a txtfile). You'll see these lines:
[Shell]
Command=2
IconFile=explorer.exe,3

[Taskbar]
Command=ToggleDesktop
Edit the path to point to your icon and put (!) quotes around it - "c:\icons\myicon.ico".
Ofcourse, you can add more toolbars like the quicklauch thing just by rightclicking your taskbar. There's some predefined bars too. If you add the "address bar", you can use that as a run dialog. Note also for the quicklaunch and your custom bars, there's the option to display large (32x32) icons.
Note (thanks ging11011!) that you can enter any name of a desktop shortcut in the box and it will run (!). ConveniŽnt if your desktop is full with windows. Or you might hide your desktop icons and use the desktop folder to store shortcuts to anything you'd like and run them from here.
Also, check this quick plugin that will add a winamp control to the bars available (thanks idvah for pointing it out).

[*toptool:] Or get ShortPopUp (free, all Windows versions), by ()rm. Add a shortcut to the executable to the quicklauch bar or a new toolbar. When clicked it will display a popup menu of the contents of any folder you define (!) - could be .lnk files, .mp3 playlists, anything. New version also finds subfolders and displays them as submenu's (after this, it really got me hooked :). Now also with sorting options added to the popup!
[*plastic:] This is a real personal favorite of mine. It takes a little reading and configuration, but it can be just about anything you want - don't miss out!
And there's Fusion Band (shareware, all versions). Like QuickLaunch, but each item displays a configurable popup menu, your own links, icons and a sidebar like the startmenu with big icons on, taking your systems colors. Could save you some space (like when you disable your QuickLaunch bar :), and most of all, looking very good when fully customized!

Another taskbar tool that's been around (and under active development) is True Launch Bar. Basically its a pretty configurable App Launcher, has options for menu gradients, a 'skins' feature, looking good. Shareware, all Windows versions).

There's other ways to add a toolbar. Joshua Poot submitted the one taking up nearly no space. Create a folder, anywhere. Click rename, hold your ALT key down and type 0160. This should produce a folder with no name. Well, that is, if you've still got the ms sans serif font underneath your icons (if not, use the windows charmap.exe to locate the number that produces an empty space with this font).

Now, add some links to the folder, rightclick the taskbar, choose "new toolbar" and point it to the folder. Looks regular, but when you drag it to the systray as far as you can, it will leave you with only the double arrow. Clicking that will present you a popup with them links :). Thanks!

CutTheRedWire adds you can use the links toolbar as a launch center. Rightclick your taskbar, choose toolbars, links. Disable title and text, rightclick, choose "open folder". Inside, set up folder(s) and fill with links (html, but also executables). Folder icon will show up and when clicked you'll get a popup with your links. Basic, but a real space saver!

And, for extended possibilities, check this page on how to add an html page to your quicklaunch area.
Systray
Too much icons near the clock, just using some? PC-Magazine used to provide two excellent utilities for free. Traymanager (2.0) adds another icon there, but has a popup menu where you can store all the ones you don't use. Tray Magician takes a different approach. It hides the systray, or (option) just the icons, not the clock. Move your cursor over the clock or the utter right and it is shown again. Both beautiful coding, but under a subscription service now, annoying, because the rest of their utilities is easily replaceable with freeware alternatives, just not these two... Licenses don't permit us to provide the files, but:
[TMan] *cough* *cough* *cough* | [TMag] *cough*
There's also Mike Lin's TraySaver. Freeware too (Win 9x/NT4), and it lets you move those icons to a seperate panel.

And there's Tray Animations (Win 9x/2k). Free, and useless, but cool nonetheless. Have an animated icon in your systray that does nothing besides animate... and design your own!

Kendo pointed out NetLaunch (free, Win 9x/NT4). Adds an icon to the systry which, when clicked, will display a popup menu containing shortcuts to anything you would want. Indeed you can add any shortcut to the menu, but it mainly is meant to simplify/monitor/launch dial-up connections. If you add a folder, you'll have a submenu. Have a peek!

One more dug up by kendo: Traybar. Again, an icon (configurable) in the systray. On hover/click (configurable) "a menu pops up. From there you can launch all your programs. With the Config option you can configure the Traybar menu. You can add programs, folders and separators. You can also create submenus in wich you can place even more programs, folders and separators. (...) You can also specify how you want programs launched: minimized, hidden, maximized, or in a normal window" (free, all versions).

TrayIcon standard (shareware, Win 9x/NT) lets you add anything directly into the systray, with a custom 256-colored icon. Some system stuff, like the control panel items, is predefined.

DeskTask (postcardware, Win 9x/?) adds two icons to the systray. One (rightclick) lets you easily switch between open windows/applications or (leftclick) access the desktop icons. The other (rightclick) hides the desktop icons, minimizes/restores/closes all open windows/applications and has some options for the popup menus, plus (leftclick) fires up the screensaver.

STP 3/lite (that's SysTrayPlayer, free, Win 9x/2k) is a MP3-player that resides in the systray. It's partly skinnable: buttons on the popup menu/minibar and the icon (play/pause/stop version) can have their own look. Great, very unintrusive and convenient player (read on...)!

STP

That link is a 404, probably. There was a final build released, and development was announced to stop. Since it's an unique player, we'll provide the file, but there's a couple of versions around. With build 1111, skinning options were removed (and STP3 became STPlite). Build 1120 put them back in, but not for the minibar. Different versions available at Skinnables.org (orphan applications).

Uptime simply puts an icon in your systray, displaying your up-time in a tooltip.

Also, you could remove the scheduled task icon if you don't use it: double-click the systray scheduler icon in the system tray to open the scheduled tasks folder, then select Advanced -> Stop using Task Scheduler.
Systray/Clock area
We've got some clock enhancements listed, but here a tip for the area WinT picked up at Axcel216 - have a personalized message displayed at right side of the clock:
At HKEY_CURRENT_USER\Control Panel\International .. create a new string value named "s1159" (no quotes). Modify and use up to 13 characters. Repeat, now call it "s2359", use same text or something different (will shift every 12 hours).
Explained, these keys are written to from Control Panel, Regional/language options, time preferences (location differs a bit for OS's). Here you can define symbols used for AM and PM, and that's what the strings actually are. Control panel item is limited though, will only accept 8 characters and not all symbols. Note you need to adjust your clock to use those too.
Then again, if you use Tclock, Two_toNe rightfully notes that you can add any string, any length, to your custom clock string using quotes :).
Taskswitch area
There's a shareware application called CoolTaskbar (Win 9x/2k). It can move the text from the open entries, just let the icon be shown, 3D-effects can be changed and more (like select groups to get some overview).

If you're running Tclock (free, all versions), there's a "flat task switch" option, which will make the taskbar show no 3D-effects, only for the selected item. Version by Two_toNe can also disable appearance of the text.
Which is done with the great Nanotweak (Win 9x/2k) by tinker. Basically, adding a string value called "MinWidth" in the registry at HKEY_CURRENT_USER\Control Panel\Desktop\WindowMetrics and setting a value will let you define the size of the items here. Setting it to "-270" (one pixel is mostly 15 here) enabled us to only show the icons here, but this is system specific, check out details (and more) at NanoSkin!
This tweak stopped working properly in Windows XP, due to it "grouping" folders, IE windows etc. You can decrease width of the items, but not have only the icons be shown (not even with this grouping turned off at taskbar properties).

For complete control (?!), Mike Lin's Taskbar Commander lets you alphabetize/rearrange the icons in this area... (free, 9x/?).
Taskbar Sorter, when run, sorts the items there in groups, then closes itself. Nifty.
Autohide/Always on top
Got the taskbar set to 'autohide' too ?? Then you've noticed there's still a real thin line visible when it hides...
Martin Bresson wrote a free app to fix this (Win 98/NT and special 95 version), get it at his homepage. This utility screws up Tclock though...

Another utility to handle this line, and also gives you some control over the "hiding behaviour", is Taskbar Activate (Win 9x/2k). Same problems with running other tools in the area, though...

If you have the taskbar set to always on top, not autohiding, you may find some applications hiding underneath it, specially when the taskbar is at the top of your screen. Discover (free, Win 9x/NT4), corrects this behaviour.
Bitmap on taskbar
Taskbar Wallpaper by Linkexe does just this, and integrates all the items on the taskbar very well. It used to be shareware (Win 9x), but now is free! Good to know: get to the properties by rightclicking in an empty area of the quicklaunch bar.

Then there's WindowBlinds. Skinning the taskbar is just one of its abilities, and though earlier releases didn't do a great job on this, it does now! Shareware, though.

A freeware app that handles this is Windows Make-Up. But it's not integrated very well, I think... and development has stopped. Still, it has another unique feature: it let's you customize buttons on common dialogs. You can put an icon or bitmap on "Yes", "No", "Cancel" etc. Mmm, felt that one coming, 404 now. It's still an unique app, useful when running 9x; k, file here (178 kB).
Using your wallpaper to add effects to your taskbar
You could for example change your taskbar's shape (adding a curve etc...). This trick has been used a lot by shinter, pushing it to the max.

Basically the trick is to modify the wallpaper you have by adding details to it, to give the impression they are on the taskbar. If you have 2k/XP it is even better because you can use Tclock to make the taskbar transparent (approximately 60%/70%), so you can edit the wallpaper under it (by adding a cool border to your systray or your start button for example).

To change your taskbar's shape, first of all make a screenshot of your desktop and paste it an image editor to measure the height of your taskbar (in most cases: 28 or 53 pixels).
Then, open the wallpaper in the image editor and edit it by prolonging the taskbar border any way you'd like. If you are using 2k/XP and have the taskbar set to transparent, draw 2 lines on the wall, to cancel out the bevel effect of taskbar (since it's somewhat transparent), to do so you could cut out the taskbar graphics of the screenshot into a new layer and put it in front of the Wallpapper layer, then adjust its transparency. And you could also fill the taskbar area of the wall with a simple color that will cancel the transparency, or add a few cool effects that seem to be on the taskbar.

In other cases you could remove the bevel effect by using a color changer to make the window's top border color the same as the window's face. Save and refresh your wallpaper...

Note that when not using a transparent taskbar and no window top border windows don't look very good, so you could use a window skinner to completely change the window's appearance, and as you may have thought/noticed when having a maximized window your taskbar looks truncated.
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