Windows Live Login Ok but Outlook.com gives signing in error.

I am having a strange problem.  My log-in into windows live account is good but live mail/outlook.com gives me a terse error:

"There's a problem signing in". 

There is no error code available with the error message.  Just a link to report to Microsoft which I already did.  Someone replied and redirected me to post my issue here.

My hotmail.com email address was set-up to forward emails to my gmail account.  However I was regularly using my Skydrive volume via desktop app.  I was receiving forwarded emails normally till Dec-2014.  Last email forwarded was on 4th Dec 2014.  I only noticed the issue recently and when I tried to test yesterday, the sent mail bounced back for both primary as well as aliases with error "mailbox unavailable".

I have already tried the following:

1) Enabled two factor authentication. Installed the app on my mobile phone.  Login approvals are working fine.

2) Tried switching primary/secondary aliases in the account settings. No luck.  All aliases are currently set to allow login.

3) Tried all other webapps (Calendar, Skyrdrive/OneDrive in web browser, Office Webapps) and these are all working fine for me.

Any pointers on how to to get my @hormail.com email address restored?

Thanks/Mazhar