Chloe, you'll need to use SMTP, not PHP Mail to send Hotmail. If the recipient and sender both happen to be Hotmail addresses, Hotmail will mark your mail as spam.
Use the settings I posted above to configure SMTP for Hotmail. You'll need to enter your Hotmail username and password. Then sending with WP Mail SMTP should work.
If it doesn't, try this, it uses OAuth 2.0 instead of passwords.