If Windows Live Writer gave this message when trying to update the theme from your WordPress blog, and if you are using a static page, then maybe I can help.
When you click Update theme on the Blog Account tab in Writer, it downloads a number of support files from WordPress. It may write a temporary post to your blog in this process (it will ask for permission). When the blog uses a static landing page it may have trouble doing all this and can’t complete the setup.
Here is the work-around procedure
Carefully note (and jot down) the selections for your Front page and Post page settings.
Next click Your latest posts for the setting of what the Front page displays to (temporarily) disable the static page mode. The static page settings should now be grayed out.
Click Save changes – you may have to scroll down.
Back in Writer click Update theme in the Blog Account tab. The update process should now run.
If it asks for permission to do a temporary post click on Yes otherwise it will not install your theme for display in Writer.
The process should finish in a minute or two. The color, background, and fonts of your new theme will show up in the Writer main window.
Back in the browser in your WordPress dashboard in the Reading Settings page, click on A static page to re-enable your static page.
If the settings have reverted to the defaults (in case you closed and reopened your browser) reset the selections for front page and post page (that is why I asked you to jot down the settings).
Click Save changes.
You should now be back in business, your blog will again present your static page as the landing for visitors and you will have full wysiwyg (what you see is what you get) editing capability in Windows Live Writer.
Please leave me a note if you tried this and tell me of any difficulties.