Yes Hotmail for years has been rewriting the From header (which has the sender's email and name).
Right now they're migrating everyone to "new servers" and I believe they stopped doing this silliness (which also makes identities / aliases finally work with Hotmail "parent" accounts).
So there are two ways to fix this:
- Fix "your name" in Hotmail settings on their web site
- Or request an more timely migration / update to those new servers (I believe there is supposed to be a button / panel / prompt for this, again on Hotmail web site).
PS - I'm calling Outlook.com "Hotmail", but that's what it is, historically...