I have been struggling with Windows Live Writer for some time. I would continually be presented with an "invalid login" message. Finally through the Movable Type Community Forum I was able to find a solution. See this post: Invalid Login with Third Party Clients. For security reasons, an API password has been added to Movable Type. You can access it through your account page. Once I entered the right password, Windows Live Writer works like a charm. Another good page for reference on how to configure Windows Live Writer is here.