Last June, the Windows Live Hotmail team posted on some upcoming changes to the way Hotmail is handled by client email readers, and as of September 1st (yesterday, most places), the old protocol, DAV, (or Web DAV) has been retired.
If you hadn’t made changes to continue getting Hotmail in Outlook, Outlook Express, or Entourage, and accessed your mail using DAV, you won’t be able to access your Hotmail. The Windows Live Mail team blog has all the particulars on what to do. In a nutshell, either use the Outlook Connector, use Windows Live Mail, or set your Outlook Express settings to receive POP3.
These changes don’t affect Hotmail on the web, so you can always log in and get your mail that way while you get this figured out ;).