Except for the T&C you signed with Hotmail when you signed up to explicitly allow them to go through your email.
If you are actually stupid enough to leak trade secrets for Microsoft's premiere product, while using Hotmail to do it, well you really deserve what you get.
I don't know, how the situation in the US is, but in my country, if a landlord would add a statement in the rental agreement, that he can search your home, such a statement would be void from the beginning! Because you can't break or bend the law just by adding a statement in a contract in my country.
I agree with the stupidity on evidence, but Microsoft's taking advantage of that stupidity of course underlines that they will read your email if they think it is to their advantage to do so and can make a legally satisfactory argument.
If you are actually stupid enough to leak trade secrets for Microsoft's premiere product, while using Hotmail to do it, well you really deserve what you get.