The reason is probably that MSN got complaints from webmasters about the MSNbot being too greedy. So now it's very tentative with its spidering.
That may explain some of what is going on. Still, it is curious that once well-indexed sites are dropping out entirely, or, the number of pages is reduced from close to 100% down to 5-10%. I still have big hopes that "Live" will eventually become more of a competitor to Google, so the sooner that they get back on track the better it will be for them and for us.