dairyman:
Something just came to mind. I've been overlooking it this whole time!
... But now there is a problem. I deleted I message from the Thunderbird program so I can "reclaim" my Inbox. I went to to the Hotmail (which is now Winblows Live Mail) and the messages were still there.
You said that you:
Deleted message from T-Bird.
Went to Hotmail.
deleted message was still there.
You didn't say that you:
Deleted message from T-Bird.
Ran 'Get Mail' with T-Bird on that Hotmail account again.
Went to Hotmail with browser.
deleted message was still there.
You've got to run a 'Get Mail' so that T-Bird can get into your Hotmail account and delete the messages it is supposed to delete.
Also note: When you make changes to these settings within the setup of T-Bird, I'm not sure that they will take effect on messages already on your Hotmail account. In other words, there is a chance that it might appear to behave strangely, until you really think about it.
So when you are making config changes, testing, etc., I suggest you always test with new messages.