KRW Energy Systems Inc. completed installations of its external hot-gas-cleanup (HGCU) system at the Process Development Unit at Waltz Mill, PA. Two external-bed desulfurization tests were conducted on this system. An evaluation of filter performance during in-bed and external-bed desulfurization testing was completed, and filter modifications were identified as follows: increase blowback pulse flow to enable continuation of TP-037-2 and redesign the filter internals to incorporate eight additional filter elements for future testing. In-bed desulfurization test TP-036-5 demonstrated that limestone is equal to dolomite as a desulfurizing sorbent; 208 hours of operation were successfully completed to expand the PDU data base using limestone as a sorbent. Work continued to resolve problems associated with the available procedures to quantify the reactivity of spent sorbent from PDU in-bed desulfurization testing. A PDU conceptual design was completed for an external sulfation system that will process spent in-bed sorbent. Additional fines recycle studies were conducted on thermal loss and thermal efficiency optimization, and PDU modifications were defined for improved fines recycle performances. These studies considered results of the most recent analyses and observations during in-bed desulfurization test TP-036-5 and external-bed desulfurization test TP-037-1. 6 refs.