1) Find b2edit.php under the wp-admin folder and find 
           switch ($action) {                    (around line 56)
Add the following right after that:

//---Added by LaughingLizard(http://dinki.mine.nu/weblog/)

       case 'postbyfeeddemon':
   
   			$standalone = 1;
   			require_once('b2header.php');
   
   			$post_pingback = intval($post_pingback);
   			$content = $content . "<br/><strong>...excerpt from: </strong><a href=" . $post_link . ">".$post_link."</a>";
   			$content = balanceTags($content);
   			$content = format_to_post($content);
   			$excerpt = balanceTags($excerpt);
   			$excerpt = format_to_post($excerpt);
   			$post_title = addslashes($post_title);
   			$post_category = intval($post_category);
   			if(get_settings('use_geo_positions')) {
   				$latstr = $HTTP_POST_VARS['post_latf'];
   				$lonstr = $HTTP_POST_VARS['post_lonf'];
   				if((strlen($latstr) > 2) && (strlen($lonstr) > 2 ) ) {
   					$post_latf = floatval($HTTP_POST_VARS['post_latf']);
   					$post_lonf = floatval($HTTP_POST_VARS['post_lonf']);
   				}
   			}
   
           if ($user_level == 0)
               die ('Cheatin&#8217; uh?');
   
           if (($user_level > 4) && (!empty($HTTP_POST_VARS['edit_date']))) {
               $aa = $HTTP_POST_VARS['aa'];
               $mm = $HTTP_POST_VARS['mm'];
               $jj = $HTTP_POST_VARS['jj'];
               $hh = $HTTP_POST_VARS['hh'];
               $mn = $HTTP_POST_VARS['mn'];
               $ss = $HTTP_POST_VARS['ss'];
               $jj = ($jj > 31) ? 31 : $jj;
               $hh = ($hh > 23) ? $hh - 24 : $hh;
               $mn = ($mn > 59) ? $mn - 60 : $mn;
               $ss = ($ss > 59) ? $ss - 60 : $ss;
               $now = "$aa-$mm-$jj $hh:$mn:$ss";
           } else {
               $now = date('Y-m-d H:i:s', (time() + ($time_difference * 3600)));
           }
   
           if((get_settings('use_geo_positions')) && (strlen($latstr) > 2) && (strlen($lonstr) > 2) ) {
   		$postquery ="INSERT INTO $tableposts
                   (ID, post_author, post_date, post_content, post_title, post_category, post_lat, post_lon, post_excerpt,  post_status, comment_status, ping_status, post_password)
                   VALUES
                   ('0','$user_ID','$now','$content','$post_title','$post_category',$post_latf,$post_lonf,'$excerpt', '$post_status', '$comment_status', '$ping_status', '$post_password')
                   ";
           } else {
   		$postquery ="INSERT INTO $tableposts
                   (ID, post_author, post_date, post_content, post_title, post_category,  post_excerpt,  post_status, comment_status, ping_status, post_password)
                   VALUES
                   ('0','$user_ID','$now','$content','$post_title','$post_category','$excerpt', '$post_status', '$comment_status', '$ping_status', '$post_password')
                   ";
           }
           $postquery =
           $result = $wpdb->query($postquery);
   
           $post_ID = $wpdb->get_var("SELECT ID FROM $tableposts ORDER BY ID DESC LIMIT 1");
   
           if (isset($sleep_after_edit) && $sleep_after_edit > 0) {
                   sleep($sleep_after_edit);
           }
   
           if ($post_status == 'publish') {
               if((get_settings('use_geo_positions')) && ($post_latf != null) && ($post_lonf != null)) {
                   pingGeoUrl($post_ID);
               }
               pingWeblogs($blog_ID);
               pingCafelog($cafelogID, $post_title, $post_ID);
               pingBlogs($blog_ID);
   
               if ($post_pingback) {
                   pingback($content, $post_ID);
               }
   
               if (!empty($HTTP_POST_VARS['trackback_url'])) {
   				if (strlen($excerpt) > 0) {
   					$the_excerpt = (strlen(strip_tags($excerpt)) > 255) ? substr(strip_tags($excerpt), 0, 252) . '...' : strip_tags($excerpt)	;
   				} else {
   					$the_excerpt = (strlen(strip_tags($content)) > 255) ? substr(strip_tags($content), 0, 252) . '...' : strip_tags($content);
   				}
                   $excerpt = stripslashes($the_excerpt);
                   $trackback_urls = explode(',', $trackback_url);
                   foreach($trackback_urls as $tb_url) {
                       $tb_url = trim($tb_url);
                       trackback($tb_url, stripslashes($post_title), $excerpt, $post_ID);
                   }
               }
           } // end if publish
   
           if (!empty($HTTP_POST_VARS['mode'])) {
               switch($HTTP_POST_VARS['mode']) {
                   case 'bookmarklet':
                       $location = 'b2bookmarklet.php?a=b';
                       break;
                   case 'sidebar':
                       $location = 'b2sidebar.php?a=b';
                       break;
                   default:
                       $location = 'b2edit.php';
                       break;
               }
           } else {
               $location = 'b2edit.php';
           }
           header("Location: $location");
           exit();
           break;
   
           //---


2) Now in FeedDemon, go to Tools > Blog this News Item > Configure Blog Publishing Tools, then click Add. Put WordPress as the Name and enter the following into the Command Line: 
     
http://my.domain.name/wordpress.folder/wp-admin/b2edit.php?action=postbyfeeddemon&user_id=1&post_status=publish&comment_status=open&standalone=1&post_category=1&content=$ITEM_DESCRIPTION$&post_title=$ITEM_TITLE$&post_link=$ITEM_LINK$

Make sure you change the domain name and wordpress folders above before saving it...Voila!
Peace.