The state that a Windows Live ID takes when the user account with which it is associated is deleted from Outlook Live, but the Windows Live ID for the account isn’t deleted. The credentials for that Windows Live ID are still valid and recognized, but the Windows Live ID is put into a forced rename state. If someone tries to sign in using that Windows Live ID and its password, they’re asked to rename the Windows Live ID. They can rename the Windows Live ID, but because the new e-mail address can’t exist in the Outlook Live domain, the Windows Live ID is no longer functional in Outlook Live.