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No, it’s not the Live Mesh-like controllable folder sync we’re all looking for, but Microsoft says its pushing out an update to its SkyDrive application for Windows that enables some interesting new functionality.

“Our goal is to build a cloud that seamlessly connects your files to the apps and devices you use every day,” Microsoft’s Mike Torres writes in the Inside SkyDrive, Hotmail, and Messenger Blog. “In just a few weeks, more people are using SkyDrive apps than have used Mesh. People using SkyDrive for Windows or Mac are now our most engaged users, syncing files across several devices, sharing with SkyDrive.com, and working together with Office Web Apps.”

Today, Microsoft is starting to push out an update to its SkyDrive application for Windows that will appear automatically, so there’s no need for a manual download and install. Improvements in this update include:

Photo fetch in the Windows 8 Photos app. A new feature coming in the imminent Windows 8 Release Candidate will let you “fetch” photos from your other SkyDrive-connected PCs right from within the Photos app, alongside online sources such as Facebook, Flickr, and SkyDrive, and your local Pictures library.

Better performance. The SkyDrive folder on your PC will now update more quickly and reliably when changes are made on other devices, including on SkyDrive.com.

File limit. Microsoft has raised the limit on the total number of files you can have in your SkyDrive folder from 150,000 to 10 million. This should please the power users. (I’ve actually seen complaints about this, though I’d be surprised if it was an issue for people not paying for additional SkyDrive storage.)

Bug fixes. Torres reports that Microsoft has fixed a lot of smaller bugs to improve reliability.

The build number of the new SkyDrive application is 16.4.4111.0525, according to Microsoft. I’m still running 16.4.3347.0415, so I guess I’m on the original version.