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If you’re using Picasa, and you select a picture, then click on the Email button – you should be given a choice to send the email via the default email program on your computer (presumably that is Live Mail in your case) or using Gmail. We like using gmail, we know it will work for everyone, so we recommend it.
If you don’t have a gmail account, there is a link right there to “Get a Free Account”
Gmail is a separate program from Live mail, they won’t interfere with each other. We recommend using Gmail for everything however, and stop using Live mail. Just because you’re using Gmail as your email program doesn’t mean that you have to tell people to use your @gmail.com address. You can even ask gmail to reply to emails using some other address. Here’s an article we wrote on that topic:
Yes, if you send a picture from Picasa using Gmail, the message will be in your Sent folder in Gmail.