I don't believe that you can stream music to play on your Windows Live account, then again I could be wrong.
After a quick google search, I've found a website that seems to allow you to stream music for free. I'm not sure how reliable it is, but it's worth a try I think. You should also try googling for online music streaming and see what you can come up with. Free MP3 streaming server - Stream your music anywhere - Vibe Streamer
If you're wondering what you can do with a Windows Live ID, there are a multitude of things. The three most popular are the following:
E-Mail using Hotmail
Instant Messaging using MSN Messenger
Online Storage using SkyDrive
All in all, Windows Live is a sort of blanket ID service which allows you to log into all Microsoft/MSN services with one ID. There are many other services out there which allow you to do the same with multiple websites. In my opinion, it's much safer to have a strong password manager such as KeePass to save individual passwords than it is to have master accounts.