Hi Diodorus Siculus, rang neighbour this morning and Hotmail was still the same.
I've now uninstalled Avast and replaced it with AVG so PC is now back as it was before Hotmail problem.
Hotmail now works again. The thing I cannot figure out is why Avast should cause a problem with Hotmail, as I believe Avast runs with all types of Windows. This should include WindowsME I would have thought.
Thank you for your help, its very much appreciated,