Can she access her hotmail acount from another location or computer? If not, does she get a similar message?
If she can't access her acount from another location and computer, there is a distinct possibility that she did something less than legitimate, or let someone else play with her account.
It can be as simple as participating in propagating a chain letter. The terms of usage of hotmail, and almost all other providers, specificaly forbid that, just after the distribution of malware or pursuing illegal or criminal activities.
If that's the case, her account have been DELETED! ALL saved messages and contacts have been ereased for ever.
Do you have a hotmail acount yourself that you can access?
Do you have any antivirus or monitoring software (netnany or similar) active on your computer?
Open the configuration for those and change the settings to allow access to hotmail.
If you no longer need a monitoring programm, you should uninstall it.
Do you have a router that can be configured to deny access to specific web addresses?
Same as previous. The exact way is brand and model specific but should be relatively easy to find and change as needed.
Did your sister could previously access her hotmail acount from your computer?
If so, you need to find what changed since she could access her hotmail acount.
Can you find why she receive a warning about "illegal download"? Check for any unusual message she may have gotten over the past few months.
Find the source of any such message and take contact with the originator. Ask for an explanation, and if it can be reverted/corrected.