There is a slight problem with that workaround Steve. If you look at the URL, Flickr sends you to the metaweblogapi page regardless of whether you pick WordPress or metaweblogapi.
I'm actually really surprised that nobody has offered an idea about why WordPress is acting up like this.
I've also got the exact same problem. Flickr and Scribefire will not connect to my wordpress blog's xml-rpc at wilde-world.co.uk/xmlrpc.php. I've tried removing WordPress and reinstalling it, I've tried changing the permissions on it and nothing has worked.
This really is annoying, almost as annoying as the fact that this bug hasn't really gotten the attention that it should have in the past six months.
Now, does anyone have an idea why its doing this?!