The Windows Live team has finally added the much needed photo rearrange feature. Although way overdue it is better to be late than never! 
Their post below:
——————————–
Many
of you let us know how disappointed you were at being unable to arrange
photos in your Windows Live online photo albums. We appreciate your
feedback – it helps us keep improving Windows Live.
Today we’ve released a couple of quick and easy ways to
arrange your photos to better tell your stories. Now you can arrange
them by dragging and dropping them or by numbering the photos in the
order you’d like them to appear.
Arranging photos in an album
We’ve also just released a few other small changes, including a
new link from each profile that allows you to view all the photos
tagged with that person’s name, and changes to Windows Live Favorites. You can read more about it on the SkyDrive team blog.
- The Windows Live team
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