1. You had a domain name registered via Microsoft Office Live, and you forgot to renew it, si it lapsed.
2. You re-registered it with someone else.
Right so far?
Where is the name now hosted - is it parked with the new registering company? If it is, can you upgrade to a cheap hosting package with them? If you can, you can create your own email address, including the one that's 'stuck' somewhere in a Microsoft server.
When you send an email the mail servers look at the part after the @ symbol, and then find out where the domain name is hosted. They send the message to the name server involved, and that looks for a mailbox with the part of the name before the @ symbol. If it finds a box it puts the mail into it, and you download it via Outlook, or whichever mail client you use.
Microsoft can't tie up your email address if they don't have the domain name hosted on their servers.