similiar problem happened to me...
but my one is a little bit minor
after i minimized my contact list and re-opened it again
the chinese on my list becomes squashy and blurry
and if i click on my contacts it would change back to normal again
also if there's any change on the list (eg. status change, ppl loggin in, i maximize another contact group) it would change back to normal
and yeah it could be solved by the way suggested by thy
but im in love with my colored nick
so...sigh...guess ill have to live with it till a update comes out...
btw its the same both in t.chinese version and english version
my os: windows xp pro sp2
msn7: build 0777