I had the same problem so I checked the [url=http://status.messenger.msn.com/Status.aspx]server status]/url] and got this message.
quote:
Sign In
The .NET Messenger Service is temporarily experiencing difficulty. You may be unable to sign in. Please try again later.
Last Update: 5/30/2007 5:51:00 PM Pacific Time (GMT -8:00)
This should be the reason why you were getting this error. Just be patient and Microsoft should try to fix this problem.
BTW I was just able to log-in myself, so have another try