I highly doubt that any of the Microsoft Hotmail servers were comprimised in this situation. Most likely the guy just used a brute force password generator untill he got in. Email hotmail support, you will most likely get your email address back, but don't expect Microsoft to actually to the person who got into you account. My advice use a much more complex password with allot if diffrent types of characters.
1.2.1 Ball Pythons
1.0 Cali King Snake (Weebl)
0.0.1 Black Breasted Leaf Turtle (Hootie)