The Live Mesh team just posted an urgent warning on their forum:
CAUTION: Please do not delete any folders from your mesh or change folder synchronization settings.
The Live Mesh team has discovered an issue with the latest version of the Live Mesh software, and we want to make our customers aware of it immediately. Please see below for a description of the issue and what to do in the meantime. We thank you for your patience.
Issue description: If you stop synchronizing a folder in your mesh with one of your devices or if you delete a Live Mesh folder from one of your devices, that folder will stop synchronizing with all devices in your mesh. If you were sharing the folder, it will also stop synchronizing with other members' devices. Please note: no data is lost as a result of this issue; the files and folders will remain on the other devices but will no longer be synchronized.
Action: We're working to resolve this issue, and we'll post further announcements when the fix begins deploying and again once deployment is complete. In the meantime, please do not delete any folders from your mesh or change their synchronization settings.