cjim

same for me too, I just noticed it may be a bug of PHP LIBXML.

Yes, I enable XML-RPC settings, it works fine in v2.6.5, but not 2.7

I got “Invalid response document returned from XmlRpc server” error too.
I could successfully add my wordpress blog account in Live Writer, but when I open my old post, the above error occurs. I think it might be a problem of WP 2.7, because everything was OK when I use WP 2.6.5, and my Live Writer version is 12.0.1073.325.