Hi, Try reading this forum thread about how and where the password data is stored, it may still apply though Live is updated very often:
http://forums.fanatic.net.nz/index.php?showtopic=15837
I first ran into info here: http://www.fanatic.net.nz/2006/07/13/windows-live-messenger-security-risk/
Used the "Read more in the forum" link there to get to the thread.
Have a look here, as well> http://windows-live-messenger.qarchive.org/
http://forums.fanatic.net.nz/index.php?showtopic=15837
I first ran into info here: http://www.fanatic.net.nz/2006/07/13/windows-live-messenger-security-risk/
Used the "Read more in the forum" link there to get to the thread.
Have a look here, as well> http://windows-live-messenger.qarchive.org/