The most recent progress update can be found on page 3 of this thread - http://www.gamesas.com/bgsforums/index.php?showtopic=1008178&st=40&start=54.
Please read that post for the most updated progress information, screenshots and gameplay footage. Read below to find out what this project is all about.
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DaggerXL is a modern Daggerfall Engine Recreation for current Operating Systems and hardware. It will ultimately fully emulate the game of Daggerfall and then optionally enhance it by refining existing features and adding new gameplay elements that were originally intended. The game will make use of hardware acceleration providing higher resolutions, color depth, greatly improved visibility, better texture filtering, enhanced performance and more.
DaggerXL is/will be just an engine, you need the original game data to play. I will not distribute any Daggerfall assets or knowingly provide information on obtaining free copies of the game. This is a legal project, I do not intent to step on Bethesda's toes or violate their copyrights. Daggerfall was one of the most ambitious RPGs ever made but was marred by limited technology, bugs and limited time. Many features were cut that I intend to optionally restore. You'll be able to play classic Daggerfall if you think it was perfect as is or enjoy new features such as sailing your boat, proper morphing spells, properly saving items you place in your house furniture and more.
Now I'm sure you're thinking now, oh yeah right - how many of these have been tried and abandoned before getting anywhere... But I'm working toward a demo that you will be able to play soon featuring the first dungeon, Privateer's Hold, will full collision, monster combat, working doors and switches, UI and more. I'm not there yet but I do have a custom engine running Privateer's Hold with simple (though still buggy) collision, textures, flats, camera light (which needs to be tweaked). All the geometry is there and I can actually wander around the dungeon in first person.
You can view progress so far and in the future on my wordpress blog, which is where demos and builds will go in the future:
http://daggerxl.wordpress.com/
Here's a video of DaggerXL in action so far (note collision still has issues and I have to "cheat" to float up because the throne doesn't work yet):
http://daggerxl.wordpress.com/2009/06/28/simple-collision-proper-uvs-and-flats/
Next up is improved/proper collision detection, working doors and switches, and UI. After that enemies, random loot and light sources will be implemented. Once that is complete I'll get combat, equipment and a pre-generated character and release the demo. I'll talk more about what comes after the demo once it is out.
Here's some screenshots as well:
Edit: image tags don't seem to work, so I'm changing them to links.
http://daggerxl.wordpress.com/files/2009/06/dxl_phold1.jpg
http://daggerxl.wordpress.com/files/2009/06/dxl_phold2.jpg
http://daggerxl.wordpress.com/files/2009/06/dxl_phold3.jpg
http://daggerxl.wordpress.com/files/2009/06/dxl_phold4.jpg
http://daggerxl.wordpress.com/files/2009/06/dxl_phold5.jpg
http://daggerxl.wordpress.com/files/2009/06/dxl_phold6.jpg
http://daggerxl.wordpress.com/files/2009/06/dxl_phold7.jpg
http://daggerxl.wordpress.com/files/2009/06/dxl_phold8.jpg
http://daggerxl.wordpress.com/files/2009/06/dxl_phold9.jpg
http://daggerxl.files.wordpress.com/2009/06/dxl_privhold3.jpg?w=509&h=382