My sister had this problem, couldn't sign on, but other people could on her laptop, and she could elsewhere, it just seemed like her username on that laptop wouldn't work.
The Solution:
I'll try to remember this...
Go to
C:\Documents and Settings\[your username]\Local Settings\Applications (might be Application Data instead, can't remember) and look for
Windows Live Contacts and delete its contents, but keep a backup just incase this causes side effects. The folder will come back if it needs to I'm sure. This seemed to solve the problem.
(For Windows XP, sure it's similar for Vista, just the folder's in a different place)
Some of her settings returned to default, but I'm sure that won't be a problem for you, as long as it works.
