If you create a new account and type your hotmail address in the 'enter e-mail address' dialog, it should show (on the next screen) the account as HTTP and Hotmail. Connect to the account and it should download your folders etc.. It's a good idea to do this if you have e-mails you want to keep (.....for those who don't know, hotmail will start indiscriminatly deleting things if you go over the storage limit!)
There is a wonderful prog available for free at http://www.incredimail.com
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it allows you to set up not only your own email but hotmail accounts as well!
I use it to check my hotmail accounts and use outlook express for my personal, but that is just my personal preffs
I use incredimail. Its Great! But i got bored of the slow loading and pointless features after a while and reverted back to the Office 2003 Outlook. Unless you have outlook 2003, i would also reccoment Incredimail