Try this:
1. Sign out and exit Messenger.
2. Click Start (in XP, click Run), type the following command and click OK.
code:
%USERPROFILE%\Local Settings\Application Data\Microsoft\Messenger\
3. A new window will open. Double-click on the folder with your email address.
4. Double-click the Contacts folder.
5. Delete the two folders that are in the Contacts folder.
6. Open Messenger and sign in again.
No luck? Try this:
1. Sign out.
3. In the sign-in window, click "forget me".
4. Exit & restart messenger.
5. Try again.
Same problem
here, there doesn't seem to be a solution yet.
Here a couple people fixed the problem by doing CTRL+ALT+DEL to open Task Manager, under Processes, go to msnmsgr.exe and click End Process. Re-run Messenger.