I'm excited to hear about the new feature to see when the other person is typing, but I can't find it in the chat window. I selected both options under Chat preferences: "Show when I am typing" and "Show when contacts are typing". I hope it won't hide someplace under the Drawer as I keep it out of the way most of the time.

You can find the typing indicator in two places:
- As you guessed already it's in the drawer
- It's shown in a growl notification popup. To enable growl support you first need to install the software and then enable it in the advanced preferences. => http://www.growl.info/

I tested out the typing indicator with a friend after I installed the Beta version. She has the latest Windows version. She said her 'pencil' moved whenever I was typing, but when she was typing her 'online' status icon just changed to a static 'pencil' icon...... that's boring.....I was hoping for the moving pencil like the PC folks have. Is is supposed to remain static like that???

Yes it is currently designed to be like that.

I did not notice the indicator today, too discrete?

I recommend that there is some audio feedback to indicate when the other person is typing (a typing noise). Most people seem to want a more salient indicator that people are typing.

Good point, typing sound sounds great.

I do NOT like the idea of audio notification. I would, however, like an AIM-style icon that appears in the title bar of a window. In a multi-person chat, this should probably be disabled.

Where exactly is the typing indicator on the drawer ? MSN Messenger is good for this. I have read the threads, but fail to find.
Any chance of screen shots ?

I was hoping that when this latest Beta version went Gold the typing indicator would move like it does in the Windows version......but, alas, it does not. Still static and boring......

As others here have said, it is hard to see the indicator....as small pencil replaced the status icon next to the person with whom you are IM'ing.... a typing sound would be a bit annoying......but a moving pencil a bit larger than currently showing would be a big improvement.