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.
Chickenfoot is a great browser automation tool. With simple javascript commands like click("Submit") you can have the computer click on the button labeled "Submit". So, when can this come in handy? What about handling some automation in you online mail box.
For example. here is a Chickenfoot script which will create Folders for you in Hotmail:
var syms = "abcdefghijklmnopqrstuvwxyz"
for(var i = 0; i < syms.length; i++)
{
pick("Mark as unread listbox", "[New folder...]")
enter("Folder name:", syms[i])
click("Save")
}