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There must be another explanation in your case, as I can log into my Hotmail account with no problems. I'm using 5.5b2, but never had a problem before using b1 or any of the SP builds. And this is not because I've changed the browser ID setting--the "Identify to web servers..." setting is "OmniWeb."

My first question would be: are you blocking cookies for or If I remember correctly, I had this bouncing effect when I had the "Only from the current site" box checked under "Cookies" in the Security section of the site prefs.

Hope this helps.