As of September 1st, the old way of making a connection to Hotmail (via a protocol called WebDAV) has been discontinued. This means that as of now, when you are trying to connect to Hotmail via the build-in HTTP method in Outlook 2003 and Outlook 2007, you get a error message like this:

Task 'Hotmail: Folder:Inbox Synchronizing headers.' reported error
(0x800CCC33) : 'Access to the account was denied. Verify that your username
and password are correct.The server responded 'Forbidden'.

The only supported way of connecting to your Live Hotmail or MSN account is via the Outlook Connector or POP3.

The Outlook Connector works only for Outlook 2003 and Outlook 2007 it can be downloaded here.

Using Outlook Express included in Windows XP or Windows Mail included in Windows Vista is not an option as they only support the WebDAV connection method to Hotmail servers.