If sync has ceased working and rebooting doesn't resolve it, then the typical course of action is indeed a reinstall of Live Mesh with the appropriate reconnecting of folders to the Mesh, unfortunately.
I don't know the cause of the issue, only that these two things are what typically resolve it.
You can submit a bug report, if desired.
How to Submit Bugs and Live Mesh Logs
Note that you may not receive a response to the bug report, though. It will be transferred to the internal system to be assigned to the appropriate development group.
-steve
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