Updated for FileLocator Pro 8.0
FileLocator Pro does not automatically index files but version 8 added new functionality for creating an index over a group of files. Once built the indexes typically provide sub-second search results. The indexes aren't automatically updated so you need to update the index regularly if the data within the index is changeable.
More information on indexing can be found here:
FileLocator Pro: Indexing Interface
As an alternative to indexing FileLocator Pro also has a caching feature where the text extracted from documents (e.g. PDF, Word, Excel) can be cached for very fast searching.
Only text information is stored in the cache and the text is compressed to reduce storage space.
More information here: Cache Settings
No FileLocator Pro does not use file or content indexes and for very good reasons. While indexing can certainly improve the speed of searches in certain circumstances there are many drawbacks. These drawbacks include the processor and disk resources required to build and maintain the index, the possibility of the index becoming out of sync with the actual files, security implications with important data copied to a location not under your control, and the fact that it is not feasible to index every file type. With FileLocator Pro you can be absolutely certain that every file is being searched without prejudice for its file type nor worry that a file is not being found due to a corrupted index. Finally, while indexing works well with boolean type searches it is not possible to use the full power of regular expressions with indexed data.