WLM 2011 seems to have brought with it a new problem for at least some users: all contacts appear offline all the time. This seems to be independent of Windows Live network, as users of Live Messenger logged in to Yahoo Messenger also experience the same.One has to assume that the fault lies with Windows Live Messenger itself. Testing the same Yahoo and Facebook accounts on other IM clients showed that the contacts were all online, not offline.
One possible fix for this is to reinstall/repair Windows Messenger completely. Perhaps, improper installation might have caused components of WLM to malfunction and show the wrong offline or online status of contacts.
To repair Windows Messenger , go to Control Panel > Programs > Programs and Features. Right click Windows Live Essentials 2011, hit Uninstall/Change. Click Repair all Windows Live programs and complete the process.
Restart WLM and the contacts would (hopefully!) be online now.