So there is a plug-in that let's you insert a picture from Flickr into Windows Live Writer. If you do a search you may or may not find the download. I got the plug-in download at: http://gallery.live.com/liveItemDetail.aspx?li=9cc421ec-b22e-45b6-98c4-3fae3846705e&bt=9&pl=8 .

After installing the plug-in, I went ahead and restarted my computer. It didn't ask me to restart, I just always do when I install something. I then opened Live Writer and saw that there is a nice little link in the right sidebar with a little Flickr Favicon and text, "Insert Flickr Image" next to it.

When I click on the link, I have to give the user ID of the photostream I want to browse, or select "Anyone", type in a "tag", then click on the Search button. If you type in a tag to search, you have to click the actual Search button versus just hitting enter. Hitting enter returns an error and you may not know you're messing up.

You can insert a thumbnail.

This is the Small pic linked to the Flickr photo.

This is the Medium pic with a 2 pt border.  There is a large size as well and additional options that I honestly have not yet figured out. There is a CSS field I'm sure referring to a style sheet. If anyone knows how to use that field, let me know.