I didn't have to select or deselect , just make sure you are using Microsoft Internet explorer , not a "compatible" browser like Fiefox or Opera , Photo Upload Tool ONLY will be invoked using Internet Explorer .
Make sure all your windows are closed , even reboot and start frsh and then open a new message in hotmail and then select attach and from that point on it will do it's stuff without you asking to install or download upload tool ....if that still doesn't work give us your configuration .
It was all automatic , again I didn't have to delete or install .
As a last resort you might just install Fiefox , it will take all your favorites as imports and then you could delete IE whatever version and start fresh .
None of my antivirus interferred ... but you might check yours and firewall etc ... but I had no issue on any of that .