I have not been able to sync my hotmail for a couple of weeks either. Soft reset doesn't help, cleaning my inbox doesn't help. I also re flashed my phone, and a clean install did nothing either. It definately looks like a server issue. Mine starts to sync....I can even see where it tries to sync my custom folders, so it's seeing the folders. But my inbox on the phone is empty, and it always errors out. I end up using the browser to access my hotmail, which works fine, but it sucks that Live is crippled