Sadly, that is the Windows Live Spaces team's decision. They have decided to rip out any HTML iframe container (which is what the Photosynth embed resides inside of) for security reasons. Photosynth's embed doesn't pose any threat, but they haven't made any exception for it.
I'll keep listening for any news about this (I'm just your fellow Photosynth user).
The best way to solve this is simply to write to the Windows Live Spaces team and tell them that embedding Photosynths is very important to you and that they should stop removing the Photosynth code from your posts.