Signed up myself and got email@example.com with a 25mb acocunt.
Logged out and signed in through hotmail, passport and msn messenger. All work.
All it took was a google search of "free msn email address" and it was in the top 10 links shown.
So, even if you pay for it, msn.com is free, and since there is no possible way to show whether yours is free or not, msn.com should definitely remain on the list of email addresses not available to sign up with.