The article describes the status of our ongoing R&D at the U.S. National Library of Medicine (NLM) towards the development of an advanced multimedia database biomedical information system that supports content-based image retrieval (CBIR). NLM maintains a collection of 17,000 digitized spinal X-rays along with text survey data from the Second National Health and Nutritional Examination Survey (NHANES II). These data serve as a rich data source for epidemiologists and researchers of osteoarthritis and musculoskeletal diseases. It is currently possible to access these through text keyword queries using our Web-based Medical Information Retrieval System (WebMIRS). CBIR methods developed specifically for biomedical images could offer direct visual searching of these images by means of example image or user sketch. We are building a system which supports hybrid queries that have text and image-content components. R&D goals include developing algorithms for robust image segmentation for localizing and identifying relevant anatomy, labeling the segmented anatomy based on its pathology, developing suitable indexing and similarity matching methods for images and image features, and associating the survey text information for query and retrieval along with the image data. Some highlights of the system developed in MATLAB and Java are: use of a networked or local centralized database for text and image data; flexibility to incorporate new research work; provides a means to control access to system components under development; and use of XML for structured reporting. The article details the design, features, and algorithms in this third revision of this prototype system, CBIR3.