How do you set up the Mail for Hotmail?

You don't. Hotmail only works in your web browser or with a Microsoft email application. There is no work around.
 
This, of course, makes Microsoft incompatible.
They also have a way of, if sending mail to a non-hotmail account, wait for 2 minutes before sending the mail, thus making the other mail-domain look slow.

I don't use hotmail any more, for these very reasons. I've switched to a .mac address and I am very pleased with the 5Mb of mail I can now receive/send as opposed to hotmails 1Mb.

Maybe you should think about changing too...
 
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