Hotmail does not have a "Mark all as read" button. To do something similar, here is a chickfoot trigger script that will add an "Open all" button, which will open all unread messages in Firefox tabs.
To use this you will need Firefox and the Chickenfoot extension.
insert(after('Mas as unread'), new Button("Open all",
function() {
for (m = find(new XPath('//a[@class="TruncateFrom"]'));
m.hasMatch;
m = m.next) {
openTab(m.element);
}
} ))