Just found this
http://www.theregister.co.uk/2013/11...soft_dns_fail/
Redmond knocked their dns up the creek with a Group Policy update. But I'm not surprised, that's what they get for eating their own dogfood and running some of their external DNS on Windows domain controllers/dns service!
That's why Hotmail, xbox live and any of the zones serviced by msft were unresolvable.