I login using a hotmail account and before it use to provide me with instant notification to email from that account on Windows Messenger as well it provided an easy link to access my inbox for hotmail. Now instead of checking my hotmail account it opens up my outlook when I try to check my email. How can I change it back so it checks my hotmail account instead?

I think you can't change it back. You've installed Windows XP SP2 which has got an updated Windows Messenger which opens Outlook instead of IE to check your Hotmail.