If you are using the free version they have restricted access through Outlook Express to paying customers only. This is the extract from the Help section on Hotmail:
To protect our users from the increasing amount of unsolicited junk e-mail or spam sent from MSN HotmailSympatico Mail accounts through Outlook and Outlook Express, we have reluctantly had to restrict the new use of Outlook and Outlook Express to subscribers.
By making this feature part of a subscription, (which requires a user to provide billing information), we can more effectively manage and put a stop to abuse of this functionality, and help protect you and others from unsolicited mail.
If you purchase a subscription service such as MSN Hotmail Plus or MSN Premium, you get access to your account from Outlook or Outlook Express, along with many other added features. To see other benefits of upgrading your MSN HotmailSympatico Mail or MSNSympatico/MSN accounts or to create a new subscription account please visit our subscription information page.
Hope this answers it for you.