With Ubuntu 9.04 and Evolution 2.26.1 I found the following settings work with live.com emails.
Go to Edit/Preferences and edit your email account.
Full name - enter your email address email@example.com
Email address, ditto.
Receiving Email tab
Server Type: POP
Security: SSL Encryption
Authentication type: Password and remember password.
Sending Email tab
Server Type: SMTP
Tick the box Server requires authentication
Security: TLS encryption
Tick the box remember password.
Everything then seems to work fine.