The NGG Plugin (by Photocrati) 1.9.8 is incompatible with the WordPress 3.5 update. Many clients reported an issue with the "XML-RPC services are disabled on this blog" message popping up when they attempt to upload photos from Lightroom using the NextGEN Gallery Export plugin.

NextGEN Gallery version 1.9.10 fixes the issue -  see http://www.nextgen-gallery.com/nextgen-gallery-1-9-10/

The problem is that NGG Plugin relies on the now obsolete option called "enable_xmlrpc" (which in my opinion the WordPress should have just kept there always set to true). There are two ways to solve the issue: 1. Wait for Photocrati to release an official update for the NGG Plugin 2. Manually patch the xmlrpc.php file in /wp-content/plugins/nextgen-gallery/lib as follows:   Original code at line 88:
function login($username, $password) {
	if ( !get_option( 'enable_xmlrpc' ) ) {
		$this->error = new IXR_Error( 405, sprintf( __( 'XML-RPC services are disabled on this blog.  An admin user can enable them at %s'),  admin_url('options-writing.php') ) );
		return false;
	}

        $user = wp_authenticate($username, $password);
  Modified code:
function login($username, $password) {
	global $wp_version;

	if (version_compare($wp_version,"3.5","<")) {
		if ( !get_option( 'enable_xmlrpc' ) ) {
			$this->error = new IXR_Error( 405, sprintf( __('XML-RPC services are disabled on this blog.  An admin user can enable them at %s'),  admin_url('options-writing.php') ) );
			return false;
		}
	}

        $user = wp_authenticate($username, $password);
Alternative solution: Strictly speaking, the change above is only necessary to make the code compatible with older versions of WordPress. You can simply remove the piece of code that checks whether the enable_xmlrpc option is turned on, marked with maroon color on the original code fragment, so the final code looks like this:
function login($username, $password) {

	$user = wp_authenticate($username, $password);

Text lines above may appear wrapped around, I recommend using copy-and-paste to avoid errors when modifying your scripts.