When I used to send emails in IE I was able to see the formatting toolbar and add smileys etc. But now using Opera I can't do so? is there a fix for this?

No, Hotmail discriminates against Opera and uses the insecure ActiveX to do that in MSIE.

hotmail sux =P go gmail lol

This has nothing to do with discriminating against Opera; Opera doesn't support the ability to do rich-text editing. There are two common methods used to initialize rich-text editing capabilities: ActiveX (proprietary), and Midas (not proprietary but not standardized either). Opera cannot (and should not) use ActiveX because of its propriety and security problems; Opera will probably never implement Midas either because its a horrible implementation and they probably don't want something so hideous to become an unrecognized standard (I don't blame them). Knowing Opera they are probably working behind the scenes with W3C to create a standardized way of dealing with rich-text formatting (they are a part of several W3C working groups which relate to web applications and this is a logical step towards the goal of web applications), but that is nothing more than a guess.

Hotmail has discriminated against Opera in the past (such as purposely ruining the ability to empty the junk-mail folder), so it is understandable that people may think that this problem also arises from discrimination. However, that is not true. The only way which Hotmail could enable rich-text formatting capabilities for Opera users is to use a specialized java applet, but Java wouldn't work too well since it would require the java plugin to be downloaded and installed and it would be a pain to create.

Yup there it is thanks good explanation mega man

JSYK - Hotmail recently fixed the junk mail deletion hiccup...