Yes, it’s possible that you were victimized by the latest Malware attack. Check out this Solution article for more info about it and for ways on how you can make your account and computer more secure:
http://windowslivehelp.com/solutions/safety/archive/2009/04/29/recent-reports-of-account-hijacks.aspx
As a safety measure, make sure the computer is updated. To get the latest security updates, visit our PC Safety line link:
http://www.microsoft.com/protect/default.mspx
You should also check your account’s signature and vacation reply if they were altered.
To check your signature:
1. Sign in to the Windows Live Hotmail website with your Windows Live Hotmail account.
2. In the upper-right corner of the page, click “Options,” and then click “More options.”
3. Under “Customize” your mail, click “Personal e-mail signature.”
4. Delete your signature in the box, and then click “Save.”
To check your vacation reply:
1. Sign in to the Windows Live Hotmail website with your Windows Live Hotmail account.
2. In the upper-right corner of the page, click Options, and then click More options.
3. Under Manage your account, click Send automated vacation replies.
4. Click “Don't send any vacation replies”, and then click Save.
About retrieving your messages and contacts, I can assist you with that. Just keep in mind that message and contacts recovery does not always have a high success rate. Anyway, post your Hotmail account and at least 3 sample contacts from your lost address book.