We moved things around a bit on our site and as a result we were no longer able to post blog entries with images to our blog. This was working prior to our changes using Windows Live Writer against the SubText blog engine. After a bit investigation it turned out to be a permission issue on the images directory. Adding the appropriate permissions to the images directory for the web application pool identity account on our blog corrected the problem. No more image upload is not supported would you like to set up FTP from Windows Live Writer!