Not sure how you are connected and I do not think this is for you as a home user but this is what MS say about IE7 and proxy connections.
"Proxy Connectivity--If you are on a network that uses a proxy server, and you notice slowness or a problem connecting to websites after upgrading to Internet Explorer 7, it might be due to web proxy auto-detection problems. To fix these problems, follow these steps:
Open Internet Explorer, click the Tools button, and then click Internet Options. Click the Connections tab. Under Local Area Networks (LAN) settings, click the LAN Settings button. Clear the Automatically detect settings check box. Click the Use a proxy server for your LAN check box. Type the address and port of your proxy server. Click OK twice. You will now be able to navigate to Internet sites."
A number of people have experienced problems with access to their Hotmail accounts after IE7. If you have such problems then in the first place download this. click here It is nearly always successful.