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After writing this question I finally found the answer:
If you're using Windows7 try changing the Compatibility in the Windows Live Photo Gallery - Properties dialog box
Instructions:
Click on Start button, the Photo Gallery shortcut icon should be there on the menu if not on your screen already. It will be in All Programs menu if not on your screen or the Start menu.
Right click on the Photo Gallery icon, click on Properties.
Click on the Compatibility tab, open the compatibility mode drop down menu by clicking on the downward arrowhead and change to the most recent mode, in my case it was to Vista (Service Pack 2).
Click on Apply then Okay and close box.
This worked for me!!! (After MONTHS of trying Mwahahaha!) YAY