I am using pidgin 2.5.4 using a email@example.com indentity that i’ve had for a long time, so bear that using the msn “live” service may be a bit different.
from your error message it appears that your login name is being accepted but the access to your contact info (which is stored at another server I believe)is not being validated. It’s unlikely that this is the culprit, but start yast2/SoftwareManagement using search and make sure that you are up-to-date on the openssl package (msn and jabber/XMPP use ssl connections which is a good thing), I have openssl package 0.9.8h-28.7.1.
Then type in pidgin and make sure that you are using the latest version of pidgin that incorporates the recent changes in msn connection protocols 2.5.4. This is probably not the case, but you can install it from the opensuse build service Software.openSUSE.org … just type in pidgin and you can find a list of available versions (i’m currently using sdrahn’s contribution). Using the one-click install will update pidgin and provide the required dependencies for libpurple/finch/etc.
the normal “vetted” pidgin version from the standard opensuse repositories are slow to change when various networks change protocol, so this “it worked before, now i can’t connect” issue happens.