While doing some troubleshooting with a Livedrive support technician I was given this little gem:
…please ensure you add this folder to the exception list on any
antivirus software you have installed. When such software runs scans it
can lock (or worse, alter) the encrypted files in this folder, which
could be the source of your issues.
To date, I’ve not seen this expressed on their website, during any installation, or in their support forum. This seems kind of important to me as just about everybody runs antivirus software these days.
Update 06 04 2011: Be sure to check out the comments section as I have a response there from an official Livedrive employee.