My mom's Hotmail address book has been hacked. What should she do now?

#1 Change password immediately.
#2 Update malware protection

If someone is spoofing her email address, there’s no defense against that.

Done + Done. Her malware protection is pretty sucky, though (Mcaffee).

Sounds like that email address might be being spoofed.
You might want to check the “sent items” from her hotmail acct. to verify.

MacAfee is usually pretty effective against a lot of malware and viruses but you may want to try something like AVG to verify. Redundancy is a good thing but if you load AVG on her PC, make sure to disable MacAfee first. Dual virus scanners will often cause problems if running simultaneously.

Best of luck.

@The_Compassionate_Heretic Good Advice. Will try.