Thanks for replying! I guess it's something to do with the Hotmail server then, they may have changed their settings. I will post if I find a solution.
I have been having this same error since Thursday, December 30, 2010. My phone was able to access my hotmail account once this morning (January 2, 2011) but has not been able to connect/update since then. Is anyone else having this problem again since mid-December? If so, is it a problem with Sprint or with Hotmail? Removing the battery did not resolve the issue...