Apart from Windows Live Mail (Hotmail) the two other Windows Live Services that I use everyday and can’t live without are:
1) Windows Live Favorites (comes as part of Windows Live Toolbar) that lets you keep bookmarks across all the PCs you use synced up using your Windows Live ID. On an average I use at least 3 machines (My Office Desktop, Laptop and my Home PC) everyday and before this service, I was going nuts emailing the links. Several years back I have been a user of Yahoo bookmarks service that lets you store and search bookmarks through a webpage but I missed the browser integration convenience.
The only nuance I found was if you are using Windows Vista, for some reasons the option to install Favorites button doesn’t appear in WL Toolbar. You just need to go to favorites page directly and install it from there. I don’t know the reason, but It works.
2) Windows Live Writer – the blog writing client software that I am using to write my blogs. dasBlog before 1.9.x didn’t support file upload from WLW, but now everything works great. I am one happy blogger!