Gordon, sorry to hear that the method of deleting I sent didn't work. It is strange what is happening. I hear of people having problems with MSN/Windows Live messenger but the problems do always seem to be with their computer itself. Apart from occasionally being unavailable due to overload, I find WLM works faultlessly.
What I would try next is to bring up your CONTACTS LIST which will include the non instant messaging contacts too, and delete the contact from that list. Also block that contact. If they still have their MSN installed they will keep on coming back if they haven't unistalled fully and have MSN set to log in automatically at start up.
Whether your using an old version of MSN or the newest version of WLM shouldn't make any difference. I don't think reporting the problem will help. When you got a conflict while trying to install WLM my guess is that the built in ''windows firewall'' that comes with XP SP2, XP SP3 and vista would have blocked it. If your firewall isn't set to give you alerts of a block, you wouldn't have known. You would need to go to the Firewall via the Control Panel, click on Exceptions and then tick the box next to WLM.
What I would do next if this failed is to completely unistall the MSN then reinstall using the download from the WLM site. The other contacts wouldn't be lost because you would log in with the same .NET log in details as before.