I think it's easier if you set if up from Email. Enter your email address, then your password.
Hit Manual Setup. -> Choose between POP3, IMAP or Exchange. I generally set mine up as exchange, easier for automatic forwarding and if I erase email from the phone it erases them from the Hotmail/Live server as well.
In the screen called server settings enter your full email address (in this case the @ hotmail or live.com). -> Your password should be there already. -> In Server put: m.hotmail.com
Make sure only Use secure connection (SSL) is checked. -> Hit next.
Choose your preferred settings on the Account Options screen. -> Hit next.