l have had the same problem, to sort this out you need to tell IE that it is a trused internet site:
1) Goto - Tools - Internet Options - Security (click trusted sites and add hotmail to the list including .com, .uk etc) also if u want to custom your security you can go to custom level.
2) In Internet Options - Privacy (you can either move the level up or down, l would personally recomment just adding hotmail as the site you want to allow cookies on, also click on advanced to make sure override automatic cookie handling is turned off) The auto cookie handling can be difficult at times l have had machines that do need it turned on to work but 90% + dont need it switched on!
That should hopefully solve your problem! If it doesnt let me know!
I did as you suggested, but it didn't make any difference: still back to the log-on screen. (It doesn't happen if I log-on to a Yahoo! address, so it looks Hotmail specific).
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