Windows Live Mail is a replacement of Windows Mail from Windows Vista, and a replacement of Outlook Express from Windows XP. Windows Mail is not supported in Windows 7, and attempting to use it will create unintended consequences as you are now experiencing.
Since Windows Live Mail is a direct successor in terms of both programming, and design to Windows Mail, I'm not sure what significant difference you are really referencing. What is the actual question? You cannot expect compatibility for this product, nor support, in Windows 7.