Okay guys, I seem to have solved the problem ! Now nicknames update correctly from MSN 7.5/WLM and vice versa !
you have to do like i did :
1) open your WLM/MSN and export all your contacts to a .cct file
2) delete all your contacts
3) open Hotmail, and deactivate your account
4) leave it for 15 mins (don't worry! your emails are still intact)
5) reactivate the account by simply re-siging in
6) import all your contacts again back to WLM/MSN, you will notice they are all emails displays, not nickname displays.
7) just wait for the contacts to sign in, and the nicknames will be updated normally, and WILL remain anywhere you sign in UNTIL they change it!
Using the above procedure, I have my nicknames change in WLM, and get the correct nicknames in work (running MSN 7.5) the SAME correct nicknames, even if they are offline, no outdated nicknames anymore !
Strange it is, I thought of trying it, and it actually worked...hmmm...
I absolutely have no technical explanation as why or how this procedure fixed my problem, but it did !