I found that the latest Windows Live Writer Beta (WLW Build 14.0.5025.904) sometimes have a problem with Link to Source Picture not working as expected. It is supposed to open the source image when you click on it but for some reason it does not work.
Here is a workaround to solve this problem.
- Open up the recently posted post.
- Select the image.
- Select Link to and set it to none.
- Then set it to Source Picture.
- Publish the post again.
Solved and now it works as expected. Not sure though what triggers this problem because it can happen on just some of the images in a blog post.