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Microsoft Office Web Apps is a great addition to Windows Live that let’s you work with documents right on the website where the document is stored.
Here are some links to information about how to get started with opening and editing documents in your browser. No software required on your computer other than browser software. I use google chrome and IE9 to access files without any issues.
This is a picture of how to access Windows Live Sky Drive where you can store up to 25 G of data and then open and edit documents in the browser.
If you go to the Office link you can create files.
Once in the document library you can create new or edit existing files. If you have Microsoft Office installed on your computer you have the option to open the file on your desktop. This helps for more complicated work such as Mail merge with and excel file.
For more information goto