Earlier this month, Microsoft made some changes to Live Mesh, including very low level support for P2P (peer to peer) folder sharing. The problem was (at the time) that you couldn’t configure this explicitly in the UI. So if you wanted to exclude the Live Desktop from a folder share (and not exceed the Web desktop’s 5 GB storage limit) there was no real way to do so. Instead, what you could do was simply share over 5 GB of data, and exceed that limit. Everything over 5 GB would be P2P only (that is, shared only between PCs in your Mesh). It wasn’t elegant but it did work: I was sharing out my 25 GB music library this way, for example.

As of last night, however, Microsoft has added explicit P2P support to Live Mesh. So you can go into a particular folder (like that music library I’m sharing) and exclude it from the Live Desktop. That’s sweet. Here’s a shot showing how you do it.

As you can see, removing a huge shared folder from the Live Desktop “fixes” the file storage limit on the Web (where, previously, I was at 100 percent usage of course.)

Nice. It just keeps getting better.