Quoting the Microsoft Service Agreement (which seems to be obligatory for those using Windows Live applications):
4. How You May Not Use the Service.In using the service, you may not:use the service in a way that harms us or our affiliates, resellers, distributors, and/or vendors (collectively, the "Microsoft parties"), or any customer of a Microsoft party;
Unless there’s a more precise definition of "use in a way that harms", that just won’t work.
Is it "harm" if I merely work on some project (commercial or in my spare time, open source or not – doesn’t matter) that interferes with the business of such an affiliate etc.?
I guess Phoenix – one of the big guys in PC BIOS development – might be somewhere in that list – their software interacts in some way with Windows, and they probably coordinate their efforts.
Phoenix probably don’t like linuxbios too much – oops, I worked on that, and used e-mail while doing so. Would this clause prevent me from legally reading and sending linuxbios mails with Windows Live Mail?