From time to time my Windows Live Mail will get itself confused and prompts me with:
"You are currently working offline. Would you like to go online now?"
No matter how many times I manically and repeatedly click "Yes" the prompt just keeps reloading. Disconnecting from the internet and restarting the PC has no effect.
Thankfully there is a solution, and it's found within Internet Explorer (no really!). It seems that Windows Live Mail takes its on/offline status from IE. So, to resolve this issue you need to:
1. Open Internet Explorer and press ALT-F to open the File menu.
2. Towards the bottom of the menu, there is Work Offline which you need to untick.
Do this and the go back to Windows Live Mail. This time, when you get the "shall I go online prompt" - click Yes and it works. Hopefully this is useful for you (if so, leave a comment!). I found this solution courtesy of the Windows Live forums