I came across an odd issue with Windows Phone 7 yesterday. The device, an HTC HD7, just could NOT access the Marketplace in any way…updates failed, new apps couldn’t be downloaded etc. The error it gave was:
“The Windows Live ID service is unavailable”
I checked various settings but everything seemed in order. Wifi & 3G were working, the marketplace worked on other WP7 devices, Hotmail still worked on the phone etc so I was at a loss.
After some head scratching, a solution was reached – which I’d like to share with you all just in case it crops up.
Go into Office and OneNote.
Select “All”.
Hit the “Sync” button on the bottom bar.
That will bring up a username/password prompt for the Live ID used with the device.
Even though the fields will be pre-populated (probably), re-type the password just to be sure.
Hit “ok” and BOOM – you’ll have access to the Marketplace 
I don’t really understand what the issue is to be honest. I could understand if ALL things that used your Live ID failed but the fact that Hotmail still worked seems odd.
If you’ve got any ideas as to the potential cause – let me know!
Cheers
Rich
Cloudy with a chance of Licensing 