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Microsoft claims it restored Hotmail e-mails and service to affected users, although complaints still persisted on Jan. 3 about missing messages.

Microsoft is still working to fix an issue that deleted Hotmail users’ e-mails. The problem had led to widespread consternation over the weekend, with complaints about missing e-mails and new messages moved to the Deleted folder.

Many of those affected users were quick to post on the Windows Live Solution Center’s online forums. “This morning when I logged into my account, all [my] email is gone,” posted one user Dec. 31. “There should be 1600+ messages in my account. I need it recovered ASAP. I have critical business information in my email.”

Without explaining what exactly had happened, Microsoft deployed engineers to fix what the company termed “a limited issue.” By the beginning of the week, a solution seemed to be in the offing.

“We have identified the source of the issue have restored email access to those who were effected,” a Microsoft moderator posted on the Windows Live Solution Center forums Jan. 2. “We recognize that even though we restored email access, some of the affected users did not receive mail sent to them during the last 24-72 hours.”

By 5 a.m. Jan. 3, those e-mails had supposedly been restored. “If you are still missing your emails, please post your issue here,” wrote another moderator, linking back to the Windows Live Solution Center (login required).

However, some users were still complaining of issues. “I’ve seen some reports of some people having their missing emails being restored, but mine are not,” read another note posted on the forums Jan. 3 at 10:31 a.m. “What do I need to do?”

Microsoft’s more recent updates to Hotmail have included Facebook Chat integration, the ability to track packages within an e-mail without needing to navigate to the shipper’s Website, a new-email attachment size of 25MB, support for viewing Dailymotion and Justin.tv videos from within an e-mail, and subfolders for more precise mail management.

The company has also been tweaking Hotmail in response to feedback. “We put a lot of time and effort into careful planning,” Dick Craddock, group program manager for Windows Live Hotmail, posted Sept. 23 on The Windows Blog, “but we also recognize that with any release, we can improve, so we do our best to listen closely and respond actively.”

Hotmail certainly faces robust competition from both Google and Yahoo, which have steadily buttressed their respective e-mail offerings with new features over the past several quarters. Although Yahoo and Microsoft have a search-and-advertising partnership, Yahoo executives have been very public about their desire to compete with other tech giants in the cloud-services arena. Facebook is also boosting its messaging capabilities, in the process opening another competitive front.