The free Microsoft-provided email program is called Windows Live Mail, which is capable of accessing email from any service provider. Microsoft calls their email service "Hotmail", which can be accessed with a browser or an email program like WLM. If you are using the WLM program you can set the "Connection" option to "never sign-in" if you don't want to use the extra features offered on Microsoft's servers (Contacts saved at contacts.live.com website, Photo Email). Your sign-in name and password is what Microsoft calls your "Live ID" which is usually the same as the email address and password you are using for the Hotmail email service. The contact list you see when you use WLM will either be your "signed-in list" or your "not signed-in list" so you should probably either make the Connection choice to "Never sign in" or fill in the correct Live ID information and let WLM remember it so you will always be signed in automatically.
So if you have an email address and password combination that is accepted when you sign in at the live.com website, it can also serve as your sign-in combination for WLM. If you don't have one, just create a new one at the website and once it's set up, you can use it to "sign-in" to WLM. But keep in mind you will be using a new (blank) "signed-in" contact list and will have to import your current list into it via WLM Contact's export/import feature.