I recently had my blog moved to a different server at my web host, and after the move, I couldn’t connect Windows LiveWriter with my blog anymore. I would get an error "Invalid Server Reponse – The response to the blogger.getUserBlogs method received from the blog server was invalid." I found this post which was exactly my problem:

http://coding-paparazzi.sylvainlafontaine.com/2010/02/solving-connection-problems-wlw.html

I was able to fix it by editing my wp-config.php in notepad and saving with ANSI encoding instead of UTF-8 and re-uploading to my site. That stripped out the byte order mark at the beginning, and fixed my connection issues.