Hotmail is rolling out a server change at their end which might be causing this problem. Mozilla has spoken to them about it and they are trying to fix it. I won't be able to provide you a time estimate by when it will be solved but hotmail/mozilla is certainly looking at this issue.

I will let you know if get any updates!

I rebook-marked Hotmail and the problem went away.

The response I got from Microsoft about this problem was simply to use only Internet Explorer for Hotmail in future.

I had made a choice to use Firefox and not IE and that right has been eroded by this and similar issues with Hotmail. My thoughts are that Microsoft has a responsibility to co operate with all legitimate browser providers to ensure that their products are functional across the board - not just with their own browser. If IE was so good then I would have been persuaded to switch back to it ages ago - I resent being railroaded into it by these continuing problems. However, I need reliable access to my Hotmail account so seem to have no alternative at present. I look forward to a fix from either Microsoft or Mozilla.