I fixed this error as someone else had suggested by stopping signing in to Windows Live.
On Windows Live Home screen click on drop down arrow on the left
- Select options
3 select mail
4 select connections
5 click stop signing in.
Everything now works fine no more frozen screen or error code
I also did a repair on Windows Live essentials as it wouldn't repair before I changed the sign in option.
I spent hours trying to get this to work. Thanks to the poster for this fix