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The Microsoft Services Agreement mentions that users are required to log in to their Microsoft accounts "periodically, at a minimum of every 270 days, to keep the Microsoft branded services portion of the services active." Otherwise "we may cancel your access" and "your data may be permanently deleted from our servers."
Microsoft does not mention the possibility that email account names will be recycled. The company confirms that this is the policy, however. When the account becomes inactive "the email account is automatically queued for deletion from our servers. Then, after a total of 360 days, the email account name is made available again," according to an email statement from Microsoft. Microsoft Recycling Old email Accounts [pcworld.com]