OK, maybe this is just me but...
Everyone keeps blaming MSN for mucking about with the login. But my Kopete was working fine until I upgraded from KDE 3.3 to KDE 3.4 (Kopete 0.10). In fact, my daughter (who I haven't upgraded yet, using 0.9.2) has never had a problem logging in to MSN, nor does she now. I'll also add that GAIM doesn't have login problems either.
To me this smacks of a big stinky Kopete bug. I'm afraid it's time to stop pointing fingers at MSN and start pointing fingers at Kopete.