From the Windows Live Team blog:
Over the weekend Microsoft learned that several thousand Windows Live Hotmail customers’ credentials were exposed on a third-party site due to a likely phishing scheme.
One site indicated more than 10,000 Hotmail credentials may have been compromised. Translation: User names and passwords were illegally posted online. Most appear to be accounts in Europe and include @hotmail.com, @msn.com and @live.com accounts. If your account was on this list, you will need to fill out the form linked in the Windows Live Team post to regain access to it, as they are blocking the known compromised accounts for obvious security reasons.
If you haven’t yet read How To Avoid Phishing Worms on WLM please take time to do so. While the illegal list was removed, for a period of time, this information was available to those who may use it for phishing schemes. It is important to know what to watch out for, and how to protect yourself.