how does one determine if this ongoing hotmail problem I keep having is not caused by my computer itself?

everything else seems to work. could I have been hacked?

I'm having a particular problem currently with Outlook 2011 for Mac.  It involves typing contractions starting with "I'" such as I've or I'm.

It appears that if I type these contractions in a new email that uses the default black color and no italics everything is fine.  BUT, if I use italics or color things malfunction.  How?  If I type "I've" the "v" becomes capitalized and suddenly everything grinds to a half.  If I type the "e" I then hear a bell, the menu in the email fades to gray and I cannot type anything further.  STRANGE!  Same if I type "I'm".  The "m" capitalizes but then the ability to type ends, the keyboard freezes so to speak and when I hit a key I simply hear a bell.  Once this problem arises going back to black font and no italics doesn't help.  The problem continues.  I can go to the capitalized letter, highlight it and then type it small and it will work.  BUT, I cannot type emails that way, stopping each time.

Any ideas as to the problem?  I installed Mountain Lion so I am guessing that did something although I do not know.

Thanks.