Same Problem
I have exactly the same issue - i downloaded a new version of MSN today (Version 7.0.1 (080527)
I installed this onto 2 separate machines, both on the same wireless network at home, on a Intel Powerbook and Imac. Installed fine but when i launch to login it shows same error message and asks to retry or cancel, this is the same for both machines!! arghhh
I thought it may be a firewall thing, so i made sure the Firewall settings on my Powerbook were all set to open to allow all traffic in and out, i also changed my router settings to make sure the necessary IM ports were open. My router has IM ports set to open by default anyway (Netgear DG834PN)..
Does anyone know the actual port numbers, i'll google it but be handy to know for sure, i'll keep trying anyway, any help be much appreciated!