If you are trying to save Hotmail settings and they refuse to save, even though you know you have the right password, there is an extra step for making Hotmail compatible with Visual Matrix SMTP.
If Hotmail senses a security breach, it will send you an email.
1a. You have received an email from Microsoft Account Team
Click on the Review Recent Activity link in the email.
2. Confirm that the request was from you
Once you are on the Recent Activity page, find the section titled Unusual Activity, locate the SMTP attempt that matches the time you tried to save the account information in VM, and click "This was me". After you do this, the account info will save correctly in VM.