Helping people with computers... one answer at a time.
One of the drawbacks of a huge email provider such as Hotmail is that by the time you get there, it seems like all the good names are taken. After choosing a name, often a poor substitute for what we'd really like, wouldn't it be nice to be able to just rename the account when we get a better idea?
Sadly, it's not to be...
I know of no way to rename a Hotmail account. Or a Yahoo account. Or an account with any of the free email services. In fact, it's fairly common that even paid services cannot be renamed.
The only real alternative I know of is to create a new account, with the new name you want (assuming that's available, of course), and begin using that instead of the old.
Update: - I've added a new article that explores this topic in more depth: How do I change my Hotmail name or address?