I was having the same problem. I got an email from my host tech support in blazing time. It seems this is a problem with most services defaulting to PHP 4.
The recommendation was to use the .htaccess file to force the server to run PHP 5 when reading and accessing the pages. Two lines of code need to be added.
AddType x-mapp-php5 .php AddHandler x-mapp-php5 .php
This fixed my problem. Hopefully others who are having this problem will be helped as well.
I found a simple workaround. Configure Windows Live Writer to use FTP instead of XMLRPC for image uploads.
In WLW, do Weblog > Edit Weblog Settings… > Images > Upload images to an FTP server > Configure FTP. You’ll have to figure out the path and URL to where your images for your post get uploaded. For me, by way of example, it’s:
Folder: /www/wp-content/uploads/2008/10/
URL: http://newBBie.com/wp-content/uploads/2008/10/
Kelly Carter
http://newBBie.com (Help for new owners of BlackBerry Pearl, Curve, Bold.)
I was getting the 500 Internal Server Error due to the data type of the post_parent column in the wp_posts table. Here are the details and how I fixed it:
http://ardentdev.com/fix-for-wordpress-xmlrpc-500-internal-server-error/