The design of systems, including digital libraries, is often inspired by what technology makes possible. In user-centered design, design emphasizes users, their tasks and needs. The majority of current digital libraries are not designed for children. For digital libraries to be popular with children, they need to be fun and easy-to-use. This paper shows how observational and participatory work with children (11 to 14 year olds) as users resulted in the design of a digital library with novel-and useful-features. Beyond summarizing the design itself, a main contribution of the paper is making explicit the relationship between design and observational study, in particular, video analysis, that inspired the refinement of the initial design of the dynamic component of a children's digital library. The paper also addresses implementation and security, and discusses directions for future work. (Contains 26 references.) (AEF)