Well I ran into a big bummer with Live Mesh today. It apparently doesn't allow Windows search to index Live mesh folders which greatly reduces its utility.
Why don't you use the settings for Windows Search to point to that directory? It's very possible that Mesh is newer than the latest Search and therefore it doesn't know to automagically add that to the list of search locations.
I checked. I've rebuilt it a couple times, selected the check encrypted files. It just won't look in there.
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