Note: This is for Windows 7 users only.
In Windows XP and Vista, when you use the Windows Live Mail client, you can right-click the icon at the bottom so that it only appears as such when the app is minimized:

When using the Windows Live Messenger, by default it will also have a small icon:

However the problem is that these Windows Live applications do not do this by default in Windows 7. Instead they show as large icons to the left.
The way to get them to minimize to small taskbar icons is to set the compatibility mode to Windows Vista for each. This is easy, and once done they will act as they did in XP/Vista concerning how they look in the taskbar.
See video below for details.

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