1. If this is the first e-mail account on your iPhone, tap Mail. Otherwise, tap Settings > Mail, Contacts, Calendars > Add Account.
   
   
2. Tap Microsoft Exchange.
   
   
3. Tap in the E-mail box and enter your full e-mail address (for example, tony@contoso.com).
   
   
4. Tap in the Username box and enter your full e-mail address again.
   
   
5. Tap in the Password box and enter your password.
   
   
6. Optionally, tap in the Description box and enter a short description for the account.
   
   
7. Tap Next on the upper right corner of the screen.
   
   
8. Tap in the Server box and enter pod51008.outlook.com. If you are running software version 3.0, go upgrade your OS to version 4.
   
   
9. Tap Next.
   
   
10. Choose the type of information you want to synchronize. By default, Mail, Calendar, and Contacts are all turned on. To turn off synchronization for a type of information, tap and slide the switch to OFF.
    
    
11. Tap Save.
    
    
12. If you're prompted to create a new passcode, tap Continue and enter a numeric passcode. You'll need to enter the passcode twice.
    
    

NOTE: I'VE RUN INTO ISSUES BEFORE WHEN I HAD TO REMOVE THE OLD CONFIG, REBOOT THE IPHONE, AND START OVER.

For step by step instructions, try googling your make and model plus outlook live or choose help from the mail screen.  Here are the common settings.
External IMAP setting:
    Server name: pod51008.outlook.com
    Port: 993
    Encryption method: SSL

External SMTP setting:
    Server name: pod51008.outlook.com
    Port: 587