Richard, Outlook Express provides HTTP support for Hotmail accounts, and in any case the Bahraini inet900 service doesn't support SMTP:
http://www.inet.com.bh/InetServices/connect.asp#inet900
So, unfortunately, all that POP3/SMTP stuff doesn't apply in this case. (Why the error message mentions SMTP port 0 when it's meant to be using HTTP, I have no idea).
I wonder if the Bahraini telco is using a "transparent" HTTP proxy. This can cause problems for Hotmail, I believe. Here's a description (for Mac users):
http://www3.sympatico.ca/alxs/hotmail/index2.html