Ran into such a problem with an version of Outlook prior to 10. You need at least Outlook version 10 or higher. And also the old Outlook Hotmail Connector, previously needed for Hotmail accounts, is not working any longer, not even with newer Outlook versions.
Remove your old Hotmail profile and remove the Outlook Hotmail Connector, I even re-installed Outlook to be sure of clean and fresh new start.
Than re-enter your Hotmail account. Outlook should be able to auto configure it, by itself. The result should be that it connects to a Microsoft Exchange Server.
Don't know whether this is your problem, but hope it is helping.
Have a nice weekend
Henk
B.t.w. you helped me years ago with a crash analysis....