Windows Live Writer has some serious issues when getting asked to insert large chunks of source code that should not be altered.
Even inserting clean HTML through the HTML source view will (if you go back to design view) break your HTML.

This Windows Live Writer plugin will solve the issue by inserting code as a block element in Live Writer (like a image), while still sending plain HTML to the blog.

This plugin was written with SyntaxHighlighter in mind, so it will put your code in <pre> blocks with the appropriate attributes for your language.

Installation
Simply download the PostCodeWithDignity.dll to your <ProgramFiles?>\Windows Live\Writer\Plugins directory.
After you start WLV it will show up on your Insert list as Code.