i need sauce of this info cause i call bs. fallout does not log in when installing so how would windows live block anything?

It blocks your ability to use the game with the online GFWL. For those who care, that'll block access to earning achievements.

Does GFWL achievements, or the points that go with them, do anything useful anyway?

Nope, unless count growing the epeens of acheivement whores. Personally, I couldn't care less about them.

i need sauce of your info as i am not buying it.

Wasn't Microsoft planning on letting people trade points in for swag or something? I heard that somewhere.

Ah, at first I was under the impression that they could be traded in for MS points or something, and then subsequently used for buying stuff (or maybe I just mixing them up as I didn't know the difference), but was soon informed otherwise when I actually installed the legal copy of Fallout 3 and GFWL with it (and have since been wondering what the hell they're good for). I was hoping I could get some add-on for free after getting enough achievement points.

That part freaked me out as well. When the Game Over screen came up and that hint appeared, I looked all over the controller and went "Where the f**k is the middle sti... oh."

wow aren't you helpful. when you say something you should suppose to back it up with some facts
or shut up and never speak again.

Nah they're just there to show your mates what you've done in a game and for a fun competition between friends. Sadly like everything involving numbers people have gotten crazy about it and spend far too much time trying to boost a pointless score, even going so far as to play games they don't like and refusing to buy addons for games if they don't add achievements.
I just don't get people...

Great, another thing I won't have to worry about then. At least in WoW the achievements sometimes give you stuff you can use (after you've grinded like mad to check off the necessary ones), like some vanity pet, or a mount.

They often unlock ingame items, at least on 360/PS3 games. As an example getting all the riddler trophies in batman gives you the armoured bat suit for use in the challenge rooms. Well ONE of the achievements/trophies gives you that, think it was the riddler one

Yes, but I'm, currently working, thus a quick Google search will get you as much information as I have. The basic point with Fallout 3 is that it hasn't confirmed either way, thus, there is the possiblity that every time you reinstall, it's secretly using an activation imposed by Microsoft.
The fact is, this has been confirmed to happen with SF4, GTA4 and (possibly) DOW2 as well as others.
But by all means, ask Microsoft, I'm sure they'll answer you honestly =)

I remember there was a small shitstorm over the GFWL activation limits over on the DOW2 forums. THQ or at least Relic were unaware of it at the time and apparently it's some legacy feature that has not been removed by Microsoft although it was intended to be. I have no idea if it has actually been removed and for some reason Microsoft are extrememly silent on the whole subject. According to the guys at Relic though its a simple matter of contacting Microsoft and more activations are added with no questions asked.