i just implemented this for the username search page at my work site. it was very easy to do -- i followed the step-by-step instructions at http://blog4.bitflux.ch/wiki/LiveSearch and ended up with something between http://blog.bitflux.ch/archive/spotligh ... added.html and google suggest in functionality. all that's missing is the ability to navigate the list using cursor keys, and that's just because i couldn't figure out the css on the blog site.
a co-worker with dreamweaver helped me deal with the layer issue. that's about all i couldn't do on my own.