Microsoft Agent characters, or actors, are stored in files of the .ACS extension. Microsoft Office 97 and Microsoft Bob characters are stored in files of the .ACT extension.
An agent was embedded in Microsoft Office, starting with the 2000 edition of the software, as the Office Assistant, sometimes dubbed "Clippy" or "Clippit". A similar technology, or possibly an earlier version of the same, was used in the 97 version of the software, which is a later version of what was used in Microsoft Bob.
Any user could easily replace Clippy with other animated cartoon characters, all bearing a caricature of a human face to some extent. Users could not add characters to the ones that came with Office or modify the existing ones in shape or in behavior. For instance, they could not design a character which would have had a different, less obtrusive presentation routine or draw a character which would have been less animated or less human-looking and thus less distracting.
These animated characters were the presenters of a search function based on a sophisticated Bayesian probability program. Microsoft Research had spent years perfecting the search function and the presentation characters under the "Lumiere project". The project was named thus because many Microsoft software developers and executives were impressed by a helpful talking chandelier called "Lumiere" in the 1991 Disney feature film cartoon Beauty and the Beast. The faithful Lumiere (actually a butler turned into a chandelier by a magic spell) had helped his grumpy master win over the heart of Belle by giving discrete hints all the time. The Microsoft developers and executives thought this was good and sought to replicate it on the desktop, albeit with the goal of writing standard letters and making spreadsheets instead of gaining the love of another person.
Like its predecessor, the technology was not popular with most users, with this distaste entering popular culture, but some people found this technology genuinely useful.
The main problem was that right from the start all those involved in the Lumiere project ignored basic human psychological and physiological reactions to peripheral movement and to the presence of faces or caricatures of faces. Humans are immediately distracted by any movement in the periphery of their vision. Their concentration is also much affected by the presence of faces or caricatures of faces. Since the computer system (unlike Lumiere in the movie) had no way of telling when a user was concentrated (and should not be interrupted at any cost) and when it was the right time for a helpful hint, the interventions often came at the wrong time in a chronically annoying way.
Microsoft still has groups working on Bayesian algorithms and software agents, and they seem to be paying more attention to the annoying interruption issues, if their reported research can be used as an indicator.
Microsoft also has people who are very much aware of the issues behind peripheral movement and have developed information awareness software which bypasses the problem completely.