What web-based services are available to help track the progress of legislation? 

For example, Sen. Clinton and Sen. Frist introduced a healthcare bill,
S.1262.  I want to find a service that will notify me via email when
significant actions occur on this bill, e.g. the bill passes, or is
voted down.  The service should have the ability to track both House
and Senate legislations.
Of course a free service would be preferrable, but a for-pay service
would be acceptable as well.

Hello,

As mentioned by a commenter, thomas.loc.gov allows you to track bills
for free. However, it does not provide e-mail alerts.

If you need to be alerted of developments by e-mail, you should
consider Congressional Quarterly's e-mail alert service, which is part
of a subscription to CQ.com. I did a free trial of CQ once, and it was
enormously helpful.

Source: Congressional Quarterly, "CQ.com E-mail Alerts,"
http://www.cq.com/corp/images/comemailalertcollateral.pdf

Another option is Thomson's LegAlert. It advertises a similar service.
See the product description at
(http://www.netscan.com/Outside/LegServices.asp). A third choice is
GalleryWatch's Legislative Tracking & Notification Service
(http://www.gallerywatch.com/summary_services.htm).

I hope this answer meets your needs. If not, please request clarification.

Search strategy:

bill tracking service fee-based
://www.google.ca/search?hs=A7V&hl=en&safe=off&client=firefox-a&rls=org.mozilla%3Aen-US%3Aofficial&q=bill+tracking+service+fee-based&btnG=Search&meta=

legalert cq
://www.google.ca/search?q=legalert+cq&sourceid=mozilla-search&start=0&start=0&ie=utf-8&oe=utf-8&client=firefox-a&rls=org.mozilla:en-US:official

Thanks for this very good answer.  The only thing I extra I could have
wished for would be pricing info, and admittedly I didn't ask for
that.  So great job!
-Roy

Just a thought- shouldnt our government, as one by and for the people
supposedly, make thigns like this public knowledge???  I would think a
website should defintely be in place to make all current legeslative
actions public, and even discussions from the House and Senate floors
(special/secret committee's aside).  Hmmmmm

Oh, it's all published on the web,  no problem there.  My problem is I
need a service that will automatically _notify_ me when there are
updates so I don't have to go check every week or whatever.

Iswhatis brings attention towhatis something that couda-shouda been
done already. One must ponder over hours of irrelevant pontification
to enjoy a minute of inspiring fire.  The service might also notify
the client as to who is speaking. I not only support the proposal, but
will add a tip if the researcher gets Google to add this to their
service.
I might also point out that a ?Greatest Hips? daily or weekly
compilation of obvious hypocrisy and positions might eclipse the
current rating leader in information, Jon Stewart.

You can track legislation through the Library of Congress website.  Their 
"THOMAS" section (for Thomas Jefferson) tracks legislation.