Sharon,
So, let's see if I understand, you have Windows Live Mail, and you have added your xxxx@officeliveusers.com account to Windows Live Mail as an HTTP type account using the FULL ID of xxxx@officeliveusers.com and the correct password for that e-mail account. Then, when you try to send an e-mail using that account; the e-mail cannot be sent -- you get an error of what?
Have you tried going to http://home.officelive.com and signing in as xxxx@officeliveusers.com with that e-mail's password; then clicking on the E-Mail link and checking to see if messages can be sent and received from there?
Also, you have only the free fourth-level domain (yyyy.web.officelive.com) -- you do not have a custom domain name, like zzzzz.com? And you have not redirected a custom domain name to your website?
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