@adamwozniak, when xRez Studio says "login to your Windows Live account", he means exactly what you just said.
What is now (since 2012) called 'Microsoft Account' was previously called:
Microsoft Passport Network,
and (at the time that xRez Studio commented) Windows Live ID.
The name isn't the important thing. It's all Microsoft's single sign on service.
You have always been able to sign up for a Microsoft Account with a non-Microsoft email address, but it is the same thing, whether you have an @hotmail.com, @msn.com, @live.com, @outlook.com, or @microsoft.com etc. address or whether you signed up with your @yahoo.com, @gmail.com, @me.com or other personal email address.
You wouldn't have a Photosynth.net account if you didn't already have a Microsoft Account to sign up with.
http://account.live.com/ is the Microsoft Account (previously Windows Live ID) website.