If so and you’re running an
ATi AMD graphics card try this:
I’ve just experienced the same problem. It was caused by installing the ATI 11.5 Catalyst driver update from Windows Update.
To resolve it open Catalyst Control Center, goto the “Gaming” section and untick the top checkbox “Morphological filtering”.
Apply those settings and then restart Windows Live (making sure the process is actually stopped in task manager before starting it)
The quote comes from Windows Client > Windows 7 IT Pro Forums. It’s still an issue with the 12.8 Catalyst drivers as I’ve just encountered it.