Try one or all of the following.
1) Are you using MSN Messenger?
If you are, you could try accessing Hotmail through there.
2) Have you checked if you have CAPS LOCK on?
Sometimes you can miss that and your Password will be wrong.
3) Restart PC - open
www.hotmail.com - choose login with DIFFERENT account name - choose "any name you can think of"@hotmail.com and log on (it will refuse). This will clear your login with Hotmail. Then try with your own account name and pswd again.
Spôôk