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:

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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.

Drag and drop photos

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