By M Ilyas Khan BBC News, Karachi

Benazir Bhutto faces a huge welcome from supporters

Pakistan's former Prime Minister Benazir Bhutto has landed in Karachi amid an atmosphere that is no clearer now than it was a month ago.

When she gave a date for ending her self-imposed exile, it was thought that most legal and political issues gripping the country at the time would have been resolved by now.

But court battles over the legal status of the country's military ruler, General Pervez Musharraf, have gone on longer than expected.

He won a controversial new term as president earlier this month, but the result remains unofficial. The Supreme Court must still rule on whether he was eligible to stand for election by MPs in the first place.

Ms Bhutto, with her popular appeal, is likely to compete more aggressively with Gen Musharraf for space in government

Proceedings resumed on Wednesday and a decision is not expected for at least two weeks.

Meanwhile, a new law invalidating corruption cases against Ms Bhutto is the subject of another legal challenge, meaning she could still face arrest following her return.

She also faces suicide bombing threats from pro-Taleban militants who have vowed to kill her.

Power-sharing talks

Ms Bhutto, who heads the country's largest political force, the Pakistan People's Party (PPP), has been prime minister twice.

KEY DATES 06 Oct: Presidential polls held 17 Oct: Supreme Court resumes hearing challenges to Musharraf candidacy 18 Oct: Date ex-PM Benazir Bhutto has set for her homecoming 15 Nov: Parliamentary term ends and general election must be held by mid-January In pictures: Karachi prepares

On both occasions, her government was prematurely dismissed by the president of the day under special powers.

She left Pakistan in April 1999, two years after her husband had been jailed and a series of corruption charges brought against her. She denies the charges.

Since general elections in 2002, Ms Bhutto has been engaged in on-off talks to share power with Gen Musharraf.

He needs such an arrangement because the current ruling party, the PML-Q, has failed to generate popular support for his policies.

In 2006, the two sides made some progress towards a possible understanding but Ms Bhutto apparently failed to convince Gen Musharraf's representatives that he must quit as army chief before running for another term as president.

But Gen Musharraf has been weakened in 2007 after trying - and failing - to sack Pakistan's chief justice.

The move sparked nationwide protests and the most serious challenge to his rule since he seized power in a 1999 coup.

Immediately before the presidential election earlier this month, Gen Musharraf's lawyers promised the Supreme Court that he would quit as army chief before taking the oath as president.

With this pledge, a major stumbling block in the way of a Musharraf-PPP rapprochement was removed.

That was followed by the enactment of the National Reconciliation Ordinance (NRO), a controversial law that provides for court cases to be dropped against public figures, including Ms Bhutto, who have been charged but not convicted.

Legal limbo

Other prominent Bhutto-Musharraf differences remain to be bridged, however, such as a constitutional bar on anyone serving more than two terms as prime minister, or the president's special powers to dismiss the government.

"She is the mediocre daughter of a great leader." In pictures

Ms Bhutto's PPP wants both these provisions scrapped, but appears to have put the issue on the back burner for now.

The party seems confident that it will have another chance to sort them out, perhaps with the backing of Western powers.

These powers, led by the US, still support Gen Musharraf's role in the "war on terror", but there have been growing concerns about the country's lack of democracy.

These concerns synchronise with Gen Musharraf's rising unpopularity at home, which has reduced his ability to deliver at a time of plummeting morale among troops fighting the Taleban and their allies near the Afghan border.

Ms Bhutto - with a popular base and decidedly secular, liberal credentials - may be an ideal choice to try to rein in militancy in the country.

Her party has a record of effectively clearing up trouble in Karachi as well as in the north-west in the mid-1990s.

But Ms Bhutto, with her popular appeal, is likely to compete more aggressively with Gen Musharraf for space in government.

And she is returning to the country at a time when many crucial issues are still unresolved.

She can use this legal limbo to her advantage by pressing the government for more concessions, such as guarantees for free elections.

But she also runs the risk of arrest if the Supreme Court rules the corruption amnesty illegal.

Meanwhile, analysts predict a disrupted election campaign due to fear of terror attacks.

This will work to the PPP's disadvantage, especially in Punjab province where electoral support is crucial for the stability of any government of Pakistan.