I’ve worked on a number of software products, and there were several that were ideal candidates for dynamically updating, embedded help – but since that sort of effort is usually software developer-intensive, I was never able to make it happen (not for lack of trying by myself and some wonderful software developers).
The wait is over; and convergence was the answer. Doc-To-Help is developed by ComponentOne; ComponentOne develops components software developers use to streamline Visual Studio development. The C1 DynamicHelp for Winforms control was born.Short tour: this control can easily be dropped into the main window of your app, as well as in dialog boxes. Once the software developer has configured it, that’s all they have to do. Mapping a compiled Help file to the user interface is the information developer’s job, because the control includes a mapping interface. Once you’ve mapped, the end user has help that updates automatically as they navigate the interface. The right help at the right time. You can see it in action in Doc-To-Help 2008 (download a trial version at http://www.componentone.com/Products/DocToHelp.aspx) If you are attending the STC Annual Conference in Philadelphia next week, you can see it there at the Doc-To-Help booth. The Dynamic Help control will be available in June. I’ll be talking about the project itself (among other things) at DocTrain East this fall. See http://www.doctrain.com/east/program_detail/all_around_user_assistance_delivering_layers_of_information_efficiently/ for more information on that. 
Since I need to play a bit of catch up; a few updates and thoughts...
Can't think of a better way to kick off summer camp than the STC Summit in Philly. (Full disclosure: I'm currently an STC Director At Large, but I've been attending the Annual Conference for years.) Hope to see you there.
Earlier this month I attended DocTrain West in Vancouver. I did a talk titled "Documentation Planning and Library Design in a Web 2.0 World." I'll be posting more on this subject later. While I was there Tom Johnson interviewed me for a podcast that he will be posting on his "I'd Rather Be Writing" blog. Looking forward to hearing it.
Great Web 2.0 read (albeit from a marketing perspective) -- "Groundswell: Winning in a World Transformed by Social Technologies" by Li and Bernoff.
More later!