Again this is written from the perspective of a Windows Live Writer user. With 25GB and the seamless upload Windows Live Photo Gallery, I store most of my photos on photos.live.com. I was hoping I could use the URL for the image in my website but have found that doesn’t work and is frustrating. Brining the post back to using a picture already stored in Photos.live.com, using the provided embed works very well. When viewing a photo stored on photos.live.com check the left hand information pane and you will see the embed code. Copy that full text, and then in Windows Live Writer go to the “Source” Tab and paste the code.
Here is where I pasted the embed code: http://cid-eb07580dfe0e1448.photos.live.com/embedphoto.aspx/Camera%20Tasks/Macro/DSC01102.JPG
Now there are Ribbon icons in the insert menu for adding photos but you can not use the provided “Web Address” but the Photo Album does work if you want to post a view of an album you have on photos.live.com
I have also found using an image from flickr is very easy as shown below, using the Flickr4Writer plugin.
So there are some options, and maybe more Plugins will start showing up now that WordPress is the default blogging platform being targeted for Windows Live.
Well the embedding does not appear to work as designed. In Windows Live Writer the image displays where I used the embed method, but the posted entry shows the URL and not the actual image. Something to look into.