It is strange that GAIM is giving me trouble connecting to MSN but other clients like Miranda dosn't here's a debug of the problem:
util: Writing file accounts.xml to directory C:\Documents and Settings\*removed*\Application Data\.gaim
account: Connecting to account *[email protected]
connection: Connecting. gc = 0157DB38
msn: new httpconn (0158DF98)
dns: DNS Lookup for: messenger.hotmail.com
proxy: Connecting to messenger.hotmail.com:1863 with no proxy
proxy: Connect would have blocked.
proxy: Connected.
msn: C: NS 000: VER 1 MSNP9 MSNP8 CVR0
msn: S: NS 000: VER 1 MSNP9 MSNP8 CVR0
msn: C: NS 000: CVR 2 0x0409 winnt 5.1 i386 MSNMSGR 6.0.0602 MSMSGS *removed*@hotmail.com
msn: S: NS 000: CVR 2 7.5.0311 7.50311 6.2.0205 http://msgr.dlservice.microsoft.com...6-b3b7-39adfdd60305/Install_MSN_Messenger.exe http://messenger.msn.com
msn: C: NS 000: USR 3 TWN I *[email protected]
msn: S: NS 000: XFR 3 NS 207.46.2.83:1863 0 65.54.239.210:1863
proxy: Connecting to 207.46.2.83:1863 with no proxy
proxy: Connect would have blocked.
proxy: Connected.
msn: C: NS 000: VER 4 MSNP9 MSNP8 CVR0
msn: S: NS 000: VER 4 MSNP9 MSNP8 CVR0
msn: C: NS 000: CVR 5 0x0409 winnt 5.1 i386 MSNMSGR 6.0.0602 MSMSGS *removed*@hotmail.com
msn: S: NS 000: CVR 5 7.5.0311 7.50311 6.2.0205 http://msgr.dlservice.microsoft.com...6-b3b7-39adfdd60305/Install_MSN_Messenger.exe http://messenger.msn.com
msn: C: NS 000: USR 6 TWN I *removed*@hotmail.com
msn: S: NS 000: USR 6 TWN S lc=1033,id=507,tw=40,fs=1,ru=http%3A%2F%2Fmessenger%2Emsn%2Ecom,ct=1135609313,kpp=1,kv=7,ver=2.1.6000.1,rn=yaz9hLHk,tpf=826f9261ebf9b33cd1f32c6fc2fc5083
dns: DNS Lookup for: nexus.passport.com
proxy: Connecting to nexus.passport.com:443 with no proxy
proxy: Connect would have blocked.
proxy: Connected.
proxy: getsockopt SO_ERROR check: Windows socket error #10061
nss: Handshake failed
msn: C: NS 000: OUT
account: Disconnecting account 010A1A90
connection: Disconnecting connection 0157DB38
msn: destroy httpconn (0158DF98)
connection: Destroying connection 0157DB38
util: Writing file accounts.xml to directory C:\Documents and Settings\*removed*\Application Data\.gaim