I'll give it a shot.

Liver insulin resistance is one of the big issues with/causing insulin resistance and type II diabetes. Fatty liver is involved in this process.

So that's a start. Next step--triglycerides are relatively inert, they're the storage form for fat, so this is sensible. Fatty liver contpributes to insulin resistance in the liver, and due to the liver's important role in whole body metabolism, fuel flux etc, liver insulin resistance is almost equivalent to whole body insulin resistance. It's not the triglycerides, though, that cause the liver to be insulin resistance. There are actually some studies in mic where choline deficiency prevents type 2 diabetes in mice by making their livers fattier. Lack of choline interferes with the ability to metabolize fats--so triglycerides increase in their livers, but the free fatty acids and certain metabolites of fat that actually cause the insulin resistance are decreased.

Okay, so you've got somebody with a fatty liver, they go on a low carb diet. Maybe they had lots of triglyceride stored in the liver, but it was inert, not so much the free fatty acids and byproducts, like those choline-deficient mice. Added to this you have the increased release of free fatty acids from the fat tissue, which an already fatty liver is ill-coped to deal with. The liver is busy defatting itself, but in the process there's this issue of insulin resistance to work through.

Ketosis might be different if the rate at which the liver defats itself is different. Also if you are insulin resistant, putting less glucose into the system will probably reduce blood glucose even if it doesn't clear up insulin resistance/glucose tolerance right away. You just have less glucose to be intolerant of.

Triglycerides in the blood are a little different, although once they're broken down and delivered to whatever tissue they end up at, they'll likely reduce local demand for glucose and have the same potential of increasing insulin resistance as fatty acids.

Different types of free fatty acids have different effects on insulin resistance, palmitic acid that's high in dairy triggers insulin resistance vs. various other fats, polyunsaturated fats tend to go the other way, I think it would be interesting to see if the fatty acid profile of our fat tissue, which depends on what you've been eating for years (unless your a bodybuilder and have recent cut down to 5 percent body fat or something) has on insulin resistance early on in weight loss.