Windows Live Folders is an online file storage service, essentially a network drive. The storage space is still 500MB, but it's expected that this will continue to expand in the future. Users with a Live ID will be able to use this service, which supports both IE and Firefox browsers. Windows Live Folders reopened for registration testing yesterday, and I registered an account in the afternoon when I had nothing else to do, just to have it ready for later use.
Currently, domestic users are still not allowed to register, but you can change your browser's preferred language to en-us to register. Additionally, you'll need to keep your browser language set to en-us when logging into Windows Live Folders in the future.