Microsoft’s latest to its emulator for the still-in-development Phone 7 platform shows some ongoing refinements, and a hint that Microsoft may be nearing a “release candidate” of the OS, after which major changes are unlikely.

And hackers unlocking the latest emulator are trying to delve into the underlying kernel and understand a range of technical issues such as memory management.

“Microsoft knows that the emulators are typically unlocked by users,” says a PR agency spokeswoman assigned to the Windows Phone group at Microsoft. “That’s why they have been very clear that the emulator is based on early code and is not reflective of the final user experience. Windows Phone 7 is still under development and we don’t have further information to share on new features.”

The emulator program lets developers start building and testing Windows Phone applications now, since actual phones with the new OS won’t be released until the “holidays” period this year, probably in the Fall. The emulator mimics on a PC screen the look, feel, and behavior of an actual Windows Phone. To do so, it includes Windows Phone 7, which is the UI layer that runs atop the underlying Windows Embedded CE kernel. Microsoft has said the radically redesigned UI, dubbed Metro, is using a new and expanded version of CE, but so far it’s said almost nothing about the changes or improvements to the kernel.

The new emulator and updated Windows Phone 7 code is contained in the April refresh of the Windows Phone Developer Tools Community Technology Preview (CTP), in effect, a public beta test release. (The initial release went live just in at Microsoft’s MIX Web developer ..  One of the emulator screens, posted at among other sites, has the following information: “Software: Windows Mobile 7.0 6176.WM7RC1Escrow(buildlab).20100406-1457”