I've experienced this problem too! It was extremely annoying!
But somehow, after a while, it just stopped. It did go on for a while, sometimes intermitant, sometimes only certain contacts could see me online, others saw me as offline.
I can't actualy remember what I did to solve the problem, if anything... As you say, other accounts work perfectly (as perfect as they can be with WLM anyway), but I think it might have gone on too long to bare and I re-installed
OR
I used the repair feature when you go to uninstall?
Hope it helps!?
/ 
