According to the official Google Webmaster Central Blog it would appear that much better Adobe Flash indexing is heading for Google.

In fact, if the Googlebot engineers posting to that blog are to be believed, the ability to index textual content in SWF format files, including Flash, has already improved. The engineers claim that any text that a user can see when interacting with a Flash file can now be properly indexed by Google.

So, for example, the textual content of Flash files can be used when Google generates a snippet for your website. Which is cool. As is the ability for Google to now match query terms in searches with words appearing in Flash files.

"We're also discovering URLs that appear in Flash files, and feeding them into our crawling pipeline—just like we do with URLs that appear in non-Flash webpages" the Google engineers say, adding "if your Flash application contains links to pages inside your website, Google may now be better able to discover and crawl more of your website."

Unfortunately, the same does not extend to images. Google will not recognize nor index text appearing in Flash file images. Google will not generate anchor text for Flash buttons which target a URL but do not have any associated text.

Rather bizarrely, given that Google owns YouTube, it does not index YouTube video FLV files. The reasoning being that these contain no text elements so it cannot be done, as of yet at least.

There are some other limitations, according to the Googlebot engineers, namely:

1. Googlebot does not execute some types of JavaScript. So if your web page loads a Flash file via JavaScript, Google may not be aware of that Flash file, in which case it will not be indexed.
   
2. We currently do not attach content from external resources that are loaded by your Flash files. If your Flash file loads an HTML file, an XML file, another SWF file, etc., Google will separately index that resource, but it will not yet be considered to be part of the content in your Flash file.
   
3. While we are able to index Flash in almost all of the languages found on the web, currently there are difficulties with Flash content written in bidirectional languages. Until this is fixed, we will be unable to index Hebrew language or Arabic language content from Flash files.