I had been struggling with making the Microsoft OneDrive account work with my Microsoft Account, which happened to be a "Hotmail" account. I had used this old account after resetting the password. It works fine for 1) Hotmail and 2)Accessing the Microsoft Store. Unfortunately, the OneDrive blocks me and the other apps (Word, Excel, etc.) just don't work. I fixed the OneDrive app by using a different Outlook.com Microsoft Account and uninstalling the OneDrive app and the re-Install it and signing in (it saves it). **The bad news is that you have to reset your phone (which wipes out all your installed apps) to redo the Microsoft Account**. Not cool!
I use a hotmail account also for all of my Microsoft devices. Works for all devices and all MS services. Have you tried contacting MS to seek a resolution so that you can use your Hotmail email address?
Sounds to me that you actually have more that one account. You can combine accounts, creating "alias" of the accounts you don't use and get access to all of Microsoft's services. I have found that I can go to Microsoft support and use Chat and get pretty good answers.
It sounds that way because I said I had more than one account. I want to abandon\close the never used Hotmail, not add it. Unfortunately, that requires a phone reset. The Outlook.com account works for everything. The Hotmail account only works for the Windows Store and Hotmail e-mail. I sure don't want to join my dysfunctional account to the Outlook.com one. I invested way to much time with Microsoft trying to get the Hotmail account to work. I am done with it. Stop trying to help. I just posted to inform people about the need to reset the phone to change Microsoft accounts.
Since when does changing your Microsoft account need a phone reset? It is in Settings under email and accounts. Delete current one then add new one? Have you tried that?
I use an outlook.com email address for OneDrive, calendars, contacts, and email, as well as for my Nokia account on my Lumia Icon. Everything works perfectly.
If you read my original post, you will notice that I switched to Outlook.com and everything works. It was the Hotmail account that was hosed and Microsoft couldn't seem to figure out why.
The only point of my post is to let people know about Windows Phone's inability to change Microsoft accounts without resetting the phone (which wipes out apps and files). iPhones do the same thing on a reset. Resets take the phone back to the point (setup-wise) you started when you did the initial setup.