Thank you for use.

The category should be acquired. Please watch an image.
And You get possible to change a category at the time of the contribution of the article.

Is the directory for upload images writbable?
Please post after confirming the setting of the blog account
again.

Please see the log and contact a pertinent part me if the error
occurred.
Log file:
C:\\Documents and Settings\\youracount\\Local Settings\\Application Data\\Windows Live Writer\\Windows Live Writer.log