These instructions are for setting-up your email on Windows Live Mail 2012, if you are using an older version of Windows Live Mail the set-up process may differ slightly from what is shown below.
Go to File -> Options -> Email accounts...
Click on Add...
Select the Email Account type and click next
You will then need to fill in your basic account details.
You will then need to fill in your account details using the following information
You're account should now verify and be set up. The next steps are only needed if you are setting up an IMAP account.
Select your account in the sidebar and then click the Accounts tab and then click on Properties
Go to the IMAP tab and change the Root folder path to "INBOX" and untick "Store special folders on IMAP server".
When you return to your Inbox it should now properly format the folders in the sidebar.