I have to admit - I'm a Windows Live Writer convert. I tried earlier versions and wasn't impressed, but I'm all over it now.
I'm also an ImageShack user. I love their free image hosting service for its ability to save me bandwidth on image hosting. It makes a surprising difference. (I even use YFrog on Twitter.)
The only real problem I ran into was that Windows Live Writer wants to upload every image to your blog for hosting. I don't want that - I want my images on ImageShack. That means leaving Windows Live Writer to upload the image from some other uploader tool, getting the URL to the image, and manually inserting it. Sort of a pain in the workflow, if you know what I mean.
As an experiment to see how different applications enable extensibility through plugins, and to ease a problem I was seeing, I wrote a Windows Live Writer plugin that uploads images to ImageShack directly. No more having to leave Windows Live Writer.
Simply drop the plugin DLL in the Windows Live Writer plugins folder, paste your ImageShack registration key into the plugin options box, and upload/insert images from the "Insert" menu in WLW:
It was surprisingly easy to write, which was cool.
It's free and open source. Go pick it up on Google Code.