Windows 7 Pro and Windows Live Mail 2012 using Hotmail IMAP account successfully since earlier this year (thanks jFiredog).  Problems started about two weeks ago with failure to connect error message as follows:

"Unable to send or receive messages for the Hotmail account.  Header download for the Deleted/Sent/Inbox/Drafts/Junk folder did not complete.  Try updating the folder list and try again.

Server response: User is authenticated but not connected.

Server: outlook.office365.com

Windows Live Mail Error ID: 0x000CCCD3

Protocol: IMAP

Port: 993

Secure SSL: Yes"

Trying folders Reset  List starts but aborts halfway and following message comes up:

"One or more problems occurred downloading your list of folders from your account. 

The folder list may be inaccurate."

In an attempt to ensure the folders are 100% 'matched' I deactivated my old Hotmail IMAP account and set up a new account exactly following jFiredog's excellent instructions.  That worked OK immediately but after closing down WLM and then opening it up again exactly the same above behaviour recurred.  

After a while a window pops up with message: "Updating your Windows Live Mail changes".  I've let this run for an hour and it never finished before I cancelled, so now I cancel after a few minutes.

And it's like this except when inexplicably and increasingly rarely I am able to send/receive.

Worst part of this problem at times it also stops my POP3 account working.

Please some good citizen expert help need urgently as I am at my wit's end and getting increasingly isolated.