The problem may happen also when %PATH% is missing the
"%ProgramFiles(x86)%\Windows Live\Shared" (64 bit)
or
"%ProgramFiles%\Windows Live\Shared" (32 bit)
directory.
Adding the directory again to %PATH% will fix the issue and keeps the files up to date in case of any subsequent software update of Live suite. Copy and paste of the dll will lead to problems when the software is updated, as long as the updated dlls are outside the install directory and the program will looks his own directory first, when searching dlls, thus finding and loading the outdated dll.