Summary: It's easy to close a Windows Live account, including Hotmail. I'll show you the steps, but then ask: why bother closing the account?
Leo you told us how to close the Hotmail account, yet the Help panel doesn't have the close account anymore? I did everything you asked but Close Account is not there. not even as a question on the help panel!
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Yep, Hotmail changed the location. The good news is that they actually made closing your account much easier.
Let me walk you through the steps.
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You must be able to login to your account. If you cannot, I don't know of a way to close the account.
Once you do login, click on the Options link:

Click on the More Options item:

On the resulting page click on View and edit your personal information:

Near the bottom of the resulting page you'll find the link you were looking for:

NOTE: this is a link to close your Windows Live account. That means if you use this account for other Windows Live services, like MSN / Windows / Windows Live Messenger, Spaces, My MSN or more, these will also be closed as well.
Your Windows Live Hotmail is really just one feature of your entire Windows Live account. As far as I know, there's no way to cancel just the Hotmail portion without cancelling the entire account.
And I'll reiterate what I've said elsewhere: why bother closing it at all? Just stop logging into it. Don't look at it, don't read it, don't send from it, and it's just as good as being closed. Closing the account doesn't do much more than that.
Related:
How do I delete my Hotmail account? [Prior Versions] Delete your MSN Hotmail account with these step-by-step instructions. Deleting your MSN Hotmail account isn't necessary, but it's easy to do.
I've lost my Hotmail password, can you help get it back? If you have lost your Hotmail password, it's impossible for me to get it back for you. However, there are measures you can take to avoid this situation
How can I get the old Windows Live Hotmail back? Windows Live Hotmail changes occasionally and typically there's no going back. If that's a problem, my question is: Why are you still using Hotmail?
Article C3629 - January 21, 2009
I want to ask, after I delete my hotmail account and my account will be deleted in all web, in my friend's contact, forums that i have been make/use or not????
17-Sep-2009
Posted by: nia at September 17, 2009 12:38 AM
I am trying to close this account that I have, but I can't, I don't know why? it says always that I have to close my window live account before to close hotmail, and how do I do that? I never joined! If it work that way. How could I do for close it....Help!! thank you for you time.
Dolce
Posted by: Dolce at September 22, 2009 7:08 AMso if my friends want email to my account that i have been deleted it can enter or not? if yes, so the new person that use my old account can read my email?
Posted by: nia at September 24, 2009 11:28 PMhi i want to ask how do i get my account back??
Posted by: nia at September 25, 2009 6:14 AMi have read the information but i didn't understand....??
HOW??
thanks leo it really worked for me
heidi
Posted by: heidi at September 29, 2009 9:12 PMToday I opened an account at [email address removed] and immediately changed my mind about having the account open. I followed the instructions about closing the account but it is still recognizing me; and I unchecked the box that said remember me. I have identity theft issues and am concerned because of the sharing factors and in fact, tried opening this account because I am having trouble receiving and sending with my yahoo account at the same address, riverockhill.
Posted by: Lynn Ann Sorensen at October 1, 2009 2:14 PMHi...I'm trying to close my windows live hotmail account and CAN'T!!! Help please!! I have followed your instructions and to no avail!! I get the message that i have a microsoft email account? I don't!! has my email been hacked?
Posted by: Letty M at October 13, 2009 11:09 AMShould i just not log in at this point? Thanks for any help you can send my way.
I just got an email from the "Windows Live Hotmail Team" last Friday stating that they were shutting down some accounts and mine was on that list. Now my friends are getting an email saying to please send $1500 right away to my sick cousin in England...I don't have any relatives in England...I have always trusted Hotmail but not anymore, nor ever again. My advice: STOP USING HOTMAIL IMMEDIATELY!
26-Oct-2009
Posted by: Kathy at October 26, 2009 5:39 AM
Your steps dont work - clearly msn is trying to force people not to close their account - first they hide the close account option then when you actually find it is sends you on a loop saying you cant close live id until hotmail is closed, but hotmail says cant close until some other non existed billed accounts are closed - and NOWHERE is there any support from MSN to close your account - even if you pull up the close account help screen they have left mail off the options. MSN is scamming like all the other disreputable web crooks - greed over morals
01-Nov-2009
Posted by: annoyed at October 31, 2009 5:35 PM
01-Nov-2009