Thanks for this info though it did not exactly solve my problem, it did lead me down the right track.
1. Using Hotmail on my PC, created new Hotmail folder
2. Moved ALL Inbox contents to new folder
3. Recreated Hotmail account in WML on TC
4. Sync ok (no messages in Inbox)
5. On PC, moved small group of messages at a time from new folder back to Inbox.
6. Sync ok.
7. Repeat 5-6 until sync failure. When failed, move last group back from Inbox to new folder then move one a time any sync until you find the offending message.
8. The message that hosed me was from the Jack Johnson's All At Once Mailing list (sender:
oniracom.0@ContactBuddy.com)
Deleting that message (or just leaving it out of a synced folder) allowed me to sync successfully once again.
Weird.