I found a simple workaround. Configure Windows Live Writer to use FTP instead of XMLRPC for image uploads.
In WLW, do Weblog > Edit Weblog Settings… > Images > Upload images to an FTP server > Configure FTP. You’ll have to figure out the path and URL to where your images for your post get uploaded. For me, by way of example, it’s:
Folder: /www/wp-content/uploads/2008/10/
URL: https://newBBie.com/wp-content/uploads/2008/10/
Kelly Carter
https://newBBie.com (Help for new owners of BlackBerry Pearl, Curve, Bold.)