An in-depth article has been published over at BuildMobile, which covers how Windows Live ID can be integrated into a Windows Phone application. The app will then be able to gain access to the user's contacts, profile detail, information from Messenger and SkyDrive, and everything else that's available via the Messenger Connect API.

What should be noted (as mentioned in the article) is that a Live ID is required, much like Facebook Connect and Twitter requiring accounts. You wont be able to transfer an app from one Live ID to another, so if you are creating an app with a Live ID account, you may wish to use an ID specifically made for the app, especially if you plan to sell the app, have multiple developers working, etc.

As well as following the steps and reading up on the detail, more information can be found over at the Windows Live Developer Portal and in the Messenger Connect documentation

Source: BuildMobile