Live uses OAuth2 for its connect workflow, notice that it isn’t OAuth WRAP.
Register a new application at Live Connect Developer Center, set your site domain as redirect domain,
Fill Client Id and Client Secret values in the settings:
SOCIAL_AUTH_LIVE_KEY = ''
SOCIAL_AUTH_LIVE_SECRET = ''
Also it’s possible to define extra permissions with:
SOCIAL_AUTH_LIVE_SCOPE = [...]
Defaults are wl.basic and wl.emails. Latter one is necessary to retrieve user email.