As you already noticed, Windows Live Tools – November 2008 CTP is available and introduces templates for Windows Azure. With this release, you can host web applications that utilize Windows Live Tools into Windows Azure. Windows Live Tools is compatible with trust policy of Windows Azure.
Lets take a quick lap on how to use Windows Live Tools into Windows Azure’s Cloud Project.

To start development with Windows Live Tools/Windows Azure, you would need to install Windows Azure SDK and Windows Azure Tools for Visual Studio. For quick start with Windows Azure, you can refer to following resources:

  1. Quick Lap around Windows Azure Tools for Microsoft Visual Studio
  2. Screen Cast for Windows Azure Tools for Microsoft Visual Studio
  3. Jim Nakashima’s Blog (Program Manger, Windows Azure Tools)
  4. Cloud Service Project Template Vs Role Project Template (blog post on Jim’s Blog describing difference in two, important in this context)
After you have installed Windows Azure SDK and Windows Azure Tools for Microsoft Visual Studio, download and install Windows Live Tools November 2008 CTP.
 
  1. Start with creating a Blank Cloud Service Project with your Visual Studio image
  2. As Cloud Service Project is created, Select Roles Node in the Solutions Explorerimage
  3. Right Click and Choose Add Role –>  New Web Role Project image
  4. This would popup Add New Dialog for Roles Template, Select Windows Live Web Role template from the installed template options  image
  5. This will add Windows Live Web Role Project to your Cloud Service Project image
  6. you can now start with Default.aspx web page, drag and drop Windows Live /Virtual Earth Controls available for you as you did previously