I have been using Onfolio blog reader since I installed MSN Live toolbar sometime ago; its nothing special but does the job. The biggest problem for me is that onfolio stores state offline so when I read a blog at work (during lunch of course!) it gets marked as read but then when I go home I have to mark it as read again....bit of a pain but at the time I had a look at Google reader and didn't like it so stuck it out with Onfolio.
Recently I installed Vista and Office 2007 and to my surprise lots of the Live Toolbar components aren't compatible with Vista! So I was using Outlook 2007 to read blogs which would without a doubt be my choice of reader but because I read on two machines I needed an online solution really, anyway....I am now back on Google Reader since its had a big shake up and works & feels much better.
Top marks Google....again!