THE BIG sign with the Coca-Cola at one end is gone now. So are the windows full of dusty cereal boxes and canned goods.

But when the neighbors stop by Diane De Pould's house, they still like to tease her by saying, "Now the meat locker was right here. The cash register was over there. And the wine bottles were stacked to the left."

In a drawer, De Pould has tucked away the liquor license issued in 1936. "If I ever finish the rec room in the basement, I'll put it up," says De Pould, a Navy trial lawyer in her late 20s.

De Pould's house, as you probably guessed, was the neighborhood meat market for many years.

In 1978, the building was one of the first to be restored in its area of Capitol Hill. The demand for houses on Capitol Hill is so strong that now even the commercial buildings in sections once considered on the far fringes are profitable to restore. Preservationists call this "adaptive use" and think it's a good way of preserving the streetscape, as well as some remarkable old structures.

Architect James Wilner (who bought, remodeled and sold the house to De Pould about a year or so ago) says, "These old commercial structures are more versatile than row houses. The spaces are very interesting. They offer a different set of possiblities from the three-rooms-in-a-line townhouse. All over town today there are churches, warehouses and garages being remodeled into houses. I'm converting a machine shop in an alley in the Shaw area now.

"I was tired of remodeling row houses -- I must have done 50 of them. After so long, there's just not that many things I could think of to do to them."

Wilner today spends more time in real estate than in architecture -- to his profit and his sorrow. About a year and a half ago, he found the meat market, bought it for $18,500, put about $50,000 in it and sold it to De Pould for $95,000. She thinks she got a real buy. Property values in the neighborhood are going up because of the townhouses and other plans for the nearby streetcar barns.

"I would have made more money if I'd sold it again without touching it," Wilner says. "Though there are not that many small builders who would be willing to speculate on rehabbing a commercial building in a fringe neighborhood."

De Pould had known Wilner earlier. Before she ever lived in a home of her own, De Pould had bought, remodeled and sold three houses. Wilner was the architect on one. She also had been a partner in five other house remodelings. All this while living in rented quarters.

"None were just what I wanted. If I couldn't find a house good enough for me, I was happy to be a gypsy.

"When I walked into this house and saw the fireplace in the kitchen, I knew it was just for me. I had to go to California, so I negotiated for the house from there."

Wilner says: "When I walked around in this place before I had started to work on it, I thought, 'Crazy. Unbelievable.' Nothing added up. It was all full of meat lockers and storage bins. There wasn't one parallel wall. I think I counted seven different exterior walls. I couldn't even draw a floor plan of it. I never did figure out how much square feet -- though I think about 1,200.

"So I told the carpenter: 'Take out all the 2nterior walls.' The only thing we left was a nice metal column with a design around the top.

"I didn't draw plans -- some of the carpenters you use these days don't read plans. I like drawing, but all that paper costs money. So I took a spray can and outlined what I wanted the workmen to do."

Wilner says there were many other things he wished he could do. There was no yard, so a roof deck would have been a great improvement. "But since I was redoing it on speculation, I had to keep the budget tight." Wilner's partners in the project were Michael Brown and Ronald L. Shapiro. Ranch Boyd was the contractor.

Where the old store windows once were, he put in plexiglas skylights to lighten the ploygonal kitchen. This corner just out like a footnote. The effect on the outside is rather strange -- sort of a fancy boarding up of windows. But then the original facade was pretty funny, too. The original (presumably) mansard roof, window bays and Palladian window were left in place, so not too much change was made.

(An iron grill on the outside of the front door testifies that the occupant still feels a bit uneasy in the neighborhood, though De Pould says she likes all her neighbors and has been touched by the way they look out for her. "I'd been a bit worried about leaving the house when I was on trips for the Navy. One time when I came back after three weeks away, a neighborhood child came up to me and said, 'I'm sure glad to have you back. We missed you those three weeks you were gone.'")

Inside, not much of the old is left except for the stair bannisters, the tall metal column shaped like a palm and the windows. So little room was on each floor that Wilner decided the only thing to do was to open it all up, in the two-story atrium effect that is now so common on the Hill it should be called "Capitol Contemporary." "We cut a few joists up on the second floor and it fell through," says Wilner. He took out all the interior partitions and put back only a few. The windows all face either south or east. All the walls are white. The ceilings are way up there -- 12 or so feet high. So the whole effect is very light, airy and contemporary.

On the first floor, you look up at the living room through a triangular two-story open area. The fireplace chimney for the first floor is like an arrow pointing up through the open area. The fireplace and a wonderfull rising sun window offer two focal points. On the other side of the room is the kitchen with a large counter area that serves both as buffet server and bar. The refrigerator is part of a wall on the other side of which is the coat closet.

It was this first floor that caught De Pould's eye -- the living kitchen, or, "the party room." "It's great when I have parties. I can get on with my cooking and still be a part of the party. And for big parties, people can lean over the rail upstairs and look down. No one feels isolated."

The kitchen is floored with black slate. But every other floor in the house (except the baths) is covered with a carpet so thick "everyone wants to sit or sleep on it," De Pould says.

A good thing, too, until De Pould gets the furniture she bought in London and elsewhere. For the time being, if you want to sit down at the small table on the first floor, you have to bring a chair down from the living room. "I have a travertine top ordered for the table, but the last I heard it was held up at the port in Baltimore because the packing has bugs," De Pould says.

Bookcases are built in on either side of the fire for De Pould's heavy law tomes as well as lighter reading.

Up the steep steps is the living room. There's another fireplace here, and a strange alcove left over when the hole in the floor was cut. De Pould thinks it is just the right spot for the grand piano when she finds one. A big soft red-flowered sofa is placed at an angle to the bay. Over the fireplace is a neoclassic metal fireplace back. There's a bath with a rudimentary shower on this floor, as well.

The steps up to the third floor begin with a series of rounded ones, making an interesting pattern. "Jim Wilner outlined them with spray paint, too," De Pould says. On the third floor are two bedrooms. De Pould's is romantic -- with flowered pillowcases, billowy curtains and flower prints. A handsome quilt hangs on a hall wall. More quilts serve here and in the guest bedrooms as bedspreads.

"I just love the house," says De Pould, with a double-handed balletdancer gesture. "I can't wait to get home. All this wonderful light and space. It makes me feel good."