This isn't really an MSN Messenger problem because you say that you don't have MSN Messenger. However, if someone is using your daughter's name without her, (or yours as her parents), permission, then this may be identity theft and/or impersonation. Both probably illegal, depending on intent, and both probably traceable. If you or your daughter knows the username that is being used in MSN, then you may have a case to pass onto the MSN authorities to deal with.
However - Are you sure someone else has stolen your daughter's name? Unless your daughter has a name that is unique, or otherwise not common, there could be someone else with the same name as your daughter. So you need to be absolutely clear that this is a case of stolen personal details before you take action.
I am not sure why you are asking about passwords, because a password for a Hotmail email account would have no bearing on logging into an MSN Messenger account. It would not work.
However, security is paramount when using computers with personal details, and so you need to protect the information stored on the computer. The best way to protect personal information is, "not to store such information"; eg, name, address, telephone number, passwords, should all be typed in as and when necessary, and not copied/pasted or called up from elsewhere on the computer. However, that isn't always practical, and so the next best utility to use is a Firewall. Firewalls are software programs that sit between the computer and the internet connection and act to prevent unauthorised data from being taken from the computer or being installed onto it.
ZoneAlarm is a good 3rd party firewall from http://www.zonelabs.com
Other things that can be done is for your daughter or anyone else using the computer to 'not' give out personal details like email addresses, names, dob's, addresses etc, in emails, chat rooms, forums, etc.
I hope this helps.
I have just found out that someone has logged onto msn messenger using my daughter's name and has posted abusive and vulgar messages. We don't have msn messenger installed because we wanted to avoid this very problem. But she does have a Hotmail address. She has heard that there are programmes you can download that reveal passwords. Is this true and how can we avoid future problems? We have changed her password.
Can anyone shed some light on this matter?