I have tried to set it up on a couple of my kids Win 7 boxes but hit FAIL when it comes to adding a child to a parent account via the Family Safety website.
The simple problem is the link to 'add your child' in to the system once you install the feature on your client pc's is missing.
I spent hours going around in circles following online docs that said I should use something that appears to be offline / removed from their website at present.
There seems to be nothing posted from the Windows Live team about the problem.
An email I sent 5-6 working days ago to the Family Safety Team remains unanswered.
Not too flash for a feature bundled as an opt in with each install of Windows Live apps.
To check out other users frustrations view the recent notes posted to the Family Safety Teams profile on Windows Live