Testing Windows Live Writer. I had to put @gmail.com after my username to get it to work with Blogger. Now I'm checking out how it handles photos. I tried aligning the photo on the right, but I couldn't get the text to wrap. But the left aligned photo seems to work. I finally found the area to save my inserted photo settings (bottom of the left pane: Save settings as default).
Now it's time to test publishing. If you're reading this post, then it worked. OOPS! It seems that a Picassa account is necessary to upload photos to Blogger. Ok, trying again (now that I set up a Picassa account).
Well, it uploaded, but as a draft instead of a post. Looks like I'll have to play around with settings a bit more.