Pigletion gave the way to disable this earlier above, but here it is again.
If you find this feature unnecessary or you don't like it here's how to turn it off.
Open Windows Live Mail | In the left upper corner click on the 'Start' button (blue menu icon)
Click on the 'Options' and then 'Mail'
Now select the 'Compose' tab.
Deselect the 'Convert special key strokes to emoticons' check box.