Windows Live Mesh - fully thought through?

You must likely won't find any way to sync sub folders with the Live Mesh. With SkyDrive you have to create single folders in the WLM account with the single LM folder on the desktop for dragging individual files no larger then 50mb in size. Those are then uploaded to the SkyDrive folder you have synced.

This works about the same for another 3rd party software the Gladinet CloudDesktop where you see a single folder for doing the same when browsing with Windows Explorer. You simply open that up and drag files into that to see the same. GLADINET - Download Gladinet Cloud Suite

Likely one of the best descriptions for the Live Mesh itself is detailed in the TechNet Magazine. Utility Spotlight Microsoft Live Mesh

It was never intended to be any type of large capacity storage medium but a convenience for the occassional file sharing with personal contacts like other family members or syncing things for home and work or home and school through the Windows Live Hotmail.

For what you are looking for there for the increased capacity you would need to look into premium online mail and storage accounts for the monthly fee of course. One idea that tends to work that as well as for SkyDrive in general is creating folders with the same names as the sub folders you use in the SkyDrive section and use a common folder for the Live Mesh.

Another option for SkyDrive especially when you have a contact or famility member to share files with or simply wanting online storage would be the live group option for this. Regardless of which version you were booted in you simply log into that to either upload, edit, and download even while at a different machine. The maximum space for that however is 5gb which isn't too bad for free online storage.

It wasn't the 5gb capacity since that is larger in some cases then seen with other free providers in that sense for storing things online. The problem there you are going to continue to run into on the other hand is trying to isolate any sub folder when the root folder is synced that is then tied into SkyDrive as well as all contents.

What the Live Mesh does is mount the specific folder in order to synce that with your WL account's SD. It's quite similar to running a VM in one way since you are bringing the SD right onto your hard drive. The same can be in similar way with mounting a folder you have on a storage drive in order to that appear on the C drive where you simply drag file onto the folder's icon while they are being copied to the other drive.

With the Live Mesh the second drive is online there however. The main folder becomes the virtual online drive. Anything inside the folder is automatically part of the sync.

You need to have that particular or any other folder you don't want involved moved or duplicated on the outside of any folder used by the LM. I haven't found anything since first having tried the Gladinet CloudDesktop app or for the Live Mesh that would isolate something once placed inside the virtual folder without some form of security lock anyways like being encrypted where it couldn't be opened remotely by any means.

That's a limitation seen on the size of files when going to upload them while the total is about 3gb of free storage for your photos, Movie Maker clips, and other files about the max size you would see with any attachment to an email. It's comparitiable to other free mail accounts in that sense.

The Live Mesh part is much on the same idea as seen with the Gladinet program but syncs through WLive rather then just any email client to a Live account for the SkyDrive part. You still see a local folder on the drive you drag files into for immediate upload. The intent is convenience rather then the need to go to the WLM account and open up a SkyDrive folder online and then drag files over to the web page from a WE window to click the add button.

For getting files moved onto a VM last year where I had one of the 7 RCs installed at the time I used the Gladinet CloudDesktop which saw a folder at the root of C as well as the VM's C drive. I uploaded by dragging files into the mounted folder and watched as the upload took place. Later by going to the SkyDrive folder while the VM was running I could download directly to the VHD.

That's probably one of the closest to what you are looking to see there. You would add that along with the use of the Live Mesh as a second program to take up the slack of what the LM is unable to do by itself. The Gladinet program would be the first alternative to try in order to find out if that will work. That sees a free Starter edition in both 32bit and 64bit flavors. GLADINET - Download Gladinet Cloud Suite

VM ware and others also see similar ideas. One place that blogs a lot on Desktop Cloud is seen at ElasticVapor :: Life in the Cloud

Other then that you then start to go into the 3rd party managed cloud services. That won't be free there!