Chat Translator for Skype is a real-time, machine translator for Skype. The application can translate your Skype conversations in real-time in 15 different language pairs. It can only translate text messages, it will not do anything with audio. The supported languages are: Chinese (simplified and traditional), English, French, German, Japanese, Russian, Finnish, Danish, Dutch, Norwegian, Italian, Portuguese, Spanish, Korean, Arabic, and Hindi.
I was surprised at how smoothly the installation of this application went. It was incredibly easy. After installing it, Chat Translator for Skype showed me some settings and asked me what languages I wanted to use. After that, I clicked on "start" and Skype told me that another application was trying to use Skype and if I wanted to allow it. I said "yes" and I started an IM chat with a friend.
Chat Translator for Skype sends the original text that you type along with a translation in between brackets. If you chose English to Spanish in your language pair, the application will reverse the pair when the other person writes back, which allows you to communicate.