Go to this website: https://accountservices.passport.net/ppnetworkhome.srf?vv=450&lc=2057
Look at "Use an e-mail address you already have
You can use any existing e-mail address from any e-mail provider when you create your credentials for Windows Live ID. Then you can use those credentials to sign in to any Windows Live ID site.
To access e-mail at www.hotmail.com, you must use an MSN or Hotmail e-mail address, or an address associated with an MSN Personal Address."
Press: "Get started now"
Go throught all the signing up fields, then follow the steps. There may be a validation e-mail (I can not remember either). Once your friend has validated or signed up with the e-mail try log into msn.