I've not seen this problem listed so here goes. This problem only occurs when "Auto completion" of addresses is activated in Preferences. Auto-completion looks at your Address Book and other emails in Mail to fill in addresses as you type them. (It also will look at any specified LDAP server.)
When entering addresses into "To", "CC", or "BCC" lines, auto-complete tries to finish your entry based on the first few letters you type. When I am sending from a 'standard' (non-Hotmail) account everything works ok. However, when sending from one of my Hotmail accounts the auto-complete function appears to be re-selecting the text as it is typed. This causes each character to overwrite the previous one or two characters. (If one types REALLY fast to enter enough characters so the entry is unique then auto-complete works.) But generally it keeps wiping out the address as it is typed.
It appears that the cursor focus is getting a spontaneous "select text" when it shouldn't. Any suggesions? Thanks!