Follow these steps-
Change Your Hotmail Password
After you login to Windows Live Hotmail, click on the Options menu:
On the resulting drop down menu, click on More options:
On the resulting "Hotmail Options" page, underneath "Manage Your Account", click on the Account details (password, aliases, time zone) link:
For security, Windows Live may ask you for your password again. Once you've entered it, you should end up on an account information page, that includes "Account Information":
Click on the Change button and you'll be taken through the steps to change your password.