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I had same issue. Here is how to fix it. This is easy and works! Thanks to whoever figured it out.
After long day of research, at last I got the solution. It seems the new Windows Live has grouped the wldcore.dll and wldlog.dll (used by Messenger, Contacts and Mail) to a folder c:\Program Files\Windows Live\Shared
Maybe because I did upgrade install it screwed up things.
The solution was simply copy paste those 2 files wldcore.dll and wldlog.dll from c:\Program Files\Windows Live\Shared to
- c:\Program Files\Windows Live\Messenger
- c:\Program Files\Windows Live\Contacts
- c:\Program Files\Windows Live\Mail
Now I can login to Windows Live Messenger and enjoy the whole Windows Live Essentials 2011 products.
This works for MS Live essentials 2012 on MS 8. I like Outlook, but it is web based and since Microsoft doesn't allow multiple accounts to be grouped, I use MS Live essentials mail on my computer. I did not copy these two files to any other location. Only to the "MAIL" folder, so I do not know if any of the other APPS work.