You see, when Outlook or Outlook Express connects to Hotmail, it uses a protocol called WebDAV to do so. Apparently, this makes it possible for spammers to create scripts which can "rapid-fire e-mail from Outlook or Outlook Express and pop off a hundred e-mails from each of those Hotmail accounts in rapid succession." By making people pay for WebDAV usage with Hotmail, Microsoft hopes to discourage such practices.
Users who want to use WebDAV to link their Hotmail or MSN mail to an Outlook can subscribe to Hotmail Plus, which also offers 2GB of e-mail space and an account that doesn't expire, for $19.95 per year, or to MSN Premium for $99.95 a year. I have four hotmail accounts that I use in this manner, and its probably time to either upgrade to Hotmail plus for one or all of them, or look for another provider.