Google Blogger does not have storage limits on blogs, even if you post pictures.
With WLW, you can post pictures to Google Blogger although Blogger does not provide an API for uploading pictures. WLW does this by posting the picture to your picasa account. You can confirm this by checking your picasa account, the pictures are in a an album called Windows Live Writer.
What is not immediately evident is that picasa has a storage quota and when you include pictures in your posts with WLW, your picture uses part of the storage quota.
What this means is that although Google Blogger has unlimited storage, you could run out of space for pictures one day, when you use up your picasa storage quota.
So, be careful that you do not use up your picasa storage quota with you WLW blogger posts.