Are you using WLM software which actually gets installed on your machine or are you referring to Windows Internet-based Live mail which you access via a browser (hotmail.com, live.com, outlook.com, etc)?
Thank you for replying to my question. I finally figured out what the problem was. I am using Windows Live which was installed to my computer when I changed over from XP to 7.
The problem was the email I received had pictures attached and it was sent Rich Text. When I went to Reply the font slot was grayed out plus a few more slots were also grayed out. I thought the problem may have been since the email was sent by Rich Text then I would have to click on Rich Text on the ribbon which I did and the font slot showed up along with all the options on the ribbon. To be sure this problem would not occur again I went into Options and clicked on Mail, then checked the box that had " send as type of text email was received", so in the future if I get a email Rich or Plain text then I won't have that problem. Didn't have this in Outlook Express with XP!!!