"Microsoft account" is the new name for what used to be called a "Windows Live ID." Your Microsoft account is the combination of an email address and a password that you use to sign in to Microsoft services.
Outlook.com and Hotmail.com account holders will need to make sure their account is a proper "Microsoft Account" by logging in to http://microsoft.live.com. If you are successful in logging in, you have a current and valid Microsoft account. If not, Create One with whichever email address you prefer. Keep in mind that the only information you need to provide is your name, email address and gender. All other information may be withheld.