This issue suddenly cropped up overnight with me, too. I downloaded the new (beta) Safari 3 and still no luck. I can't access Hotmail via Firefox either (I get a similar redirection problem message). everything was working fine with the old Hotmail, but as soon as they switched to Windows Live, I got shut out. I have an msn.com account, so can retreive e-mail through Entouage, but to delete messages, you have to go to Hotmail... Reloading, rejecting cookies - nothing works. Anyone any other ideas?
Try resetting Safari as I mentioned in my previous post. That usually works for me when I get into one of those endless loops.
Hope that does it for you.
If not, then perhaps it's just a server acting-up and may go away.