Looks like windows live sync is getting EOL'd in 2011. So, I decided to try out windows live mesh (the heir apparent).
The first thing I see when I run windows live mesh on my mac is:
"Sorry, there is a problem with Windows Live Sync. Please quit Sync, make sure your computer is connected to the Internet, and then start Sync again."
And this happens every time I re-start windows live mesh. How does this stuff pass QA?
To fix this issue you need to delete the following directories:
~/Library/Application Support/WLSync
~/Library/Application Support/Live Id
... and then re-start windows live mesh (which for some reason is still called windows live sync on a mac)