Some people have claimed that newer Hotmail accounts do not support this protocol, but that older ones were grandfathered into this feature even if they are free accounts.
I know that mine works.
You might explore another alternative such as MacFreePOPs. Discussion of how it works here. See reply 21. Because I was already using MacFreePOPs for Yahoo, I decided to just run both of them under it and disable HTTPMail....
My experience is that both HTTPMail and MacFreePOPs tend to have connection failures to Hotmail a lot. But they do work in general. They both work for me, that is. MacFreePOPs should work for you whether you have an "old" Hotmail account or a "new" one.