Adrian wrote:

It seems that it is the intention of Outlook is to mirror Hotmail. I
deleted my messages in Hotmail to cleanup the account thinking that
these messages were safe in Outlook. Upon returning to Outlook,
after deleting the Hotmail messages online, my Outlook messages were
also deleted, including the Archive file. Is this the correct
behavior of the products (connector/Outlook/hotmail)?

Yes, it is correct behavior. The contents of the Hotmail folders in Outlook
will exactly match the contents of the online Hotmail folders.

May I assume that all is lost?

If you deleted it and it is not in the online Deleted Items folder, then it
is gone permanently.

Is there a way to modify this behavior in the
future, such that the messages in Outlook are safe from operations
performed in Hotmail.

Only if you copy or move the items from the Hotmail folders in Outlook to
the local folders.

I am just interested in downloading the new
messages as they arrive in Hotmail to my Outlook. I am not looking
to control my Hotmail account from Outlook or vice-versa.

Outlook doesn't strictly "download" messages from Hotmail in the same way
that it downloads messages from POP accounts. There's two-way synchronicity
between Outlook and Hotmail.
--
Brian Tillman [MVP-Outlook]