Just to expand on an earlier point, TCAS does not just use range data, but range /rate (Tau concept). This is basically the slant range divided by the closure rate. This is then used to calculate the protected volume of airspace around the aircraft, unique to each encounter. It also uses an altitude test to see if the intruder aircraft will be within the defined altitude limits within this airspace. A TA or RA will then be issued if it is calculated the intruder will enter the airspace within the Tau time thresholds.
Sensitivity Level (SL)and Distance Modification (DMOD). Thes are used to reduce nuisance alerts, and to provide protection at low closure rates. The SL is a fucntion of aircraft altitude and changes the times which trigger the alerts. For example at 2000' an RA may be issued 15 secs prior to the intruder entering, but at 20 000' this may be as great as 35 secs. The DMOD prevents aircraft getting too close at low closure rates (600-800' depending upon aircraft altitude again). This is why, I think some of the lighties think they can fly as close to a jet at altitude as they would in the circuit, because they aren't aware that these warning times are increased so much. These numbers are generic and may be modified to suit particular types of aircraft.
Version 7, which was released in 1999, included a few changes, including making TCAS RVSM compliant i.e It doesn't issue RAs for 2 aircraft mainitaining their levels 1000' apart, but it will highlight them as proximate traffic. NOTE I DON"T THINK IT IS VFR CRUISING LEVEL COMPLIANT. If a VFR aircraft maintaining it's level crosses 500' beneath an IFR aircraft, the TCAS equipped aircraft will get an RA, even though no breakdown of separation occured. Not 100% on this one, but reasonably confident.
Hope this helps. If anyone else has more info on the VFR level thingie feel free to clarify it.
I think the main problems with the TCAS are related to the antenna. The bearing limitations were due to not having a rotating antenna (like an ATC radar). This has been improved by building a bunch of little antennas into the main one, hence gaining some directional information. I'm not sure if the Whisper/shout modes have something to do with missing traffic in close either, it may just be antenna location. Is it possible to get interference from propellors?