@DreamWriter - thank you, I have read that same post but I think it only pertains to the stock app and not the new standalone. In either case, the solution does not work (for me).
@Blossom - I've already tried using a partial address and the full address and it makes no difference. I've also already performed a password change. In regard to any restriction on password length, it should not be an issue with the full-featured Hotmail for Kindle Fire App. (standalone) Besides, it is less than the 16 characters you mention.
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