Adam, it seems the spammers for whatever reason are using your email addy as a return address in the email they sent. It doesnt mean they hacked your account - they simply set their spamming software to have your hotmail account as its 'from' address. Email is not secure and anyone can send spoofed messages. The IP address of the SMTP server it was sent from will be the spammers and not hotmails.
Obviously this means undelivered mail will be returned to your addy, and there is not much you can do about it.
