My friend gets an e-mail sent to her hotmail account
from someone every day who she is trying to block. She cannot block
his address through 'block senders' - hotmail says this address
cannot be blocked because she has exceeded her 250 blocked senders
(which is not true!). Is this some type of hack the guy has set up to
not allow hotmail to block his address? How can she get around this?
The time showing when he sent the e-mail is always the same.

He could be spoofing "Faking" his from address each time.

Check the currently blocked addresses and try to remove one.  If there
are none, try looking under spam controls, hotmail could be creating
blocked addresses for spam.

Alternatively, it could be that hotmail is broken and giving a too
many blocked addresses error for another problem.  Was the email
address properly formatted?  What domain was the email from?