WordPress categories can be managed best from the WordPress Dashboard. In Live Writer, categories can be added or removed from existing or new posts and new categories can be added. Here is how:
Open the post in Windows Live Writer – it can be a draft, a recent post, or even an older post. Live Writer always downloads a published post from your site even when you open it from your “My Weblog Posts” folder.
The assigned category or categories show in the bar right above the post text pane.
Click anywhere in that text box to open the category window.
Just set the the check marks for the categories – click the box in front of the listing to set or unset.
If you wish to add a new category, enter the category name in the box below “Add Category”. Then click the Add button. The category will be added to your post and when the post is published become part of your blogs categories.
Note that categories can be arranged in hierarchical form. That is, a category can be a sub-category of another. Just specify the “parent” category in the drop-down menu next to the Add button.
Click Publish to send the post and the changes to your site.
So, categories can be managed in Live Writer with the exception that a category cannot be removed. That you do have to do in your WordPress Dashboard.
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