Development of the CTF MEG system has been advanced with the introduction of a computer processing cluster between the data acquisition electronics and the host computer. The advent of fast processors, memory, and network interfaces has made this innovation feasible for large data streams at high sampling rates. We have implemented tasks including anti-alias filter, sample rate decimation, higher gradient balancing, crosstalk correction, and optional filters with a cluster consisting of 4 dual Intel Xeon processors operating on up to 275 channel MEG systems at 12 kHz sample rate. The architecture is expandable with additional processors to implement advanced processing tasks which may include e.g., continuous head localization/motion correction, optional display filters, coherence calculations, or real time synthetic channels (via beamformer). We also describe an electronics configuration upgrade to provide operator console access to the peripheral interface features such as analog signal and trigger I/O. This allows remote location of the acoustically noisy electronics cabinet and fitting of the cabinet with doors for improved EMI shielding. Finally, we present the latest performance results available for the CTF 275 channel MEG system including an unshielded SEF (median nerve electrical stimulation) measurement enhanced by application of an adaptive beamformer technique (SAM) which allows recognition of the nominal 20-ms response in the unaveraged signal.