Possible Outlook Virus issue, spambot sending emails

I've just setup my hotmail account with Outlook 2007, all went well, until now.

I've just logged into my hotmail address and and found about 30 delivery notification fail emails. Some of them are to old email addresses in my account that don't work, and I have a horrible feeling that the emails that are active have been spammed under my email address. My sister and neice got an email from me earlier saying click this link. There were also delivery failures from addresses i don't know, that are not in my address book.

Now, will this have something to do with me setting up my hotmail through Outlook, which has activated a trojan or whatever, or is my address randonly being used by a bot to send spam.

What are the procedures to get rid of this, help greatly appreciated.

thanks bangert

Little update if this helps, this is the email that has been sent to my neice:

Dear friend,
The 2009 is coming and all will be perfect in our life -- Studying,working ,loving & shopping .HereYou can do brilliant business also. I would like to introduce you a very good company which i knew.Their website is ***************** .They can offer you all kinds of electronical products which you need like laptops ,gps ,TV LCD,cell phones,ps3,MP3/4, etc... Please take some time to have a check ,there must be somethings you 'd like to purchase or you can do business with them to ean much money.
Their contact email:
Hope you have a good starting of the new year !
Regards

Another update, i've just logged into hotmail online and something or someone has set my automatic vacation reply to on.

!!!!