Don't know which version of Outlook that you use.  OL2003 and after
include a new junk mail filter which Microsoft likes to confuse in their
descriptive babble as how it work but it appears yet another Bayes
filter (and their periodic junk filter updates are to update the
Bayesian database).

http://en.wikipedia.org/wiki/Bayesian_spam_filtering

If you want something better, start looking into anti-spam software.
SpamPal is better than many commercialware products - alas, SpamPal
won't work with HTTP accounts, like Hotmail, nor will many other
anti-spam products unless they function as a plug-in within Outlook.  It
includes several methods for detecting spam that would encompass several
pages to describe but one of which is a Bayesian filter.  SpamPal is
free.  SpamPal does not eliminate any spam.  It tags the suspect e-mails
and you define rules in your e-mail client to handle those tagged
e-mails however you want, like deleting them or moving into the Junk
folder (and using auto-archive on the Junk folder to delete items older
than, say, 3 days).

SpamBayes will run as a plug-in to Outlook.  It provides yet another
Bayesian filter, but since OL2003 already has a Bayesian filter I'm not
sure that adding yet another one would help.

I'm only suggesting the free anti-spam solutions.  You didn't mention if
you were willing to pay for anti-spam software.  For example, Cloudmark
has their spam filter product but it isn't free.  You subscribe to a
community of users that have identified spam so when you receive then it
gets identified as spam; however, new spam that few users have yet seen
and reported will still leak through.

Since you are using a Hotmail account, one way to nearly guarantee that
you don't get spam there is to set junk filtering to the Exclusive mode.
Then only senders listed in your address book will get their e-mails
into your Inbox.  Because SpamPal, my preferred anti-spam solution,
won't work with HTTP accounts, I use Exclusive mode in my Hotmail
account.  That way, I'm filtering *in* as to who can e-mail me there.
For POP3 and IMAP4 accounts, like my free Gmail and Yahoo Mail accounts
(using YahooPOPs to connect to Yahoo), I include SpamPal in addition to
enabling the provider's spam filtering.