How to get started with Windows 7 gadgets

Combining and organizing all the current answers into one answer, then adding my own research:

Brief summary of Microsoft gadget development:

What are they written in? Windows Vista/Seven gadgets are developed in a mix of XML, HTML, CSS, and some IE scripting language. It is also possible to use C# with the latest release of Script#.

How are they packaged/deployed? The actual gadgets are stored in *.gadget files, which are simply the text source files listed above compressed into a single zip file.

Useful references for gadget development:

where do I start? Good introductory references to Windows Vista/Seven gadget development:

• Developing Gadgets for the Windows Sidebar
• Vista Gadgets Introductory tutorial from I-Programmer
• Authoring Sidebar Gadgets in C#
• Developing a Gadget for Windows Sidebar Part 1: The Basics Official MSDN tutorial.

If you are willing to use offline resources, this book appears to be an excellent resource:

• Creating Vista Gadgets: Using HTML, CSS and JavaScript with Examples in RSS, Ajax, ActiveX (COM) and Silverlight
• blog related to book: http://www.innovatewithgadgets.com/

What do I need to know? Some other useful references; not necessarily instructional

• Windows Sidebar (Official MSDN documentation)
• related Stack Overflow question: C# tutorial to write gadgets

Update: Well, this has proven to be a popular answer~ Sharing my own recent experience with Windows 7 gadget development:

Perhaps the easiest way to get started with Windows 7 gadget development is to modify a gadget that has already been developed. I recently did this myself because I wanted a larger clock gadget. Unable to find any, I tinkered with a copy of the standard Windows clock gadget until it was twice as large. I recommend starting with the clock gadget because it is fairly small and well-written. Here is the process I used:

1. Locate the gadget you wish to modify. They are located in several different places. Search for folders named *.gadget. Example: C:\Program Files\Windows Sidebar\Gadgets\Clock.Gadget\
2. Make a copy of this folder (installed gadgets are not wrapped in zip files.)
3. Rename some key parts:
   1. The folder name
   2. The name inside the gadget.xml file. It looks like:<name>Clock</name> This is the name that will be displayed in the “Gadgets Gallery” window.
4. Zip up the entire *.gadget directory.
5. Change the file extension from “zip” to “gadget” (Probably just need to remove the “.zip” extension.)
6. Install your new copy of the gadget by double clicking the new *.gadget file. You can now add your gadget like any other gadget (right click desktop->Gadgets)
7. Locate where this gadget is installed (probably to %LOCALAPPDATA%\Microsoft\Windows Sidebar\)
8. Modify the files in this directory. The gadget is very similar to a web page: HTML, CSS, JS, and image files. The gadget.xml file specifies which file is opened as the “index” page for the gadget.
9. After you save the changes, view the results by installing a new instance of the gadget. You can also debug the JavaScript (The rest of that article is pretty informative, too).