I fail to understand how hotmail could be viral.

To receive the message with "viral" footer, you had to already have a mailbox. If you did, why bother?

Maybe it was viral in the sense that it was the first widespread webmail and thus was in demand?

Yes, I remember paying for an email account that was POP3 based and part of my ISP monthly fee. I couldn't (easily) access it when away from my home machine because there was no web interface and most importantly - if I changed ISPs, I lost access to my old email address. It's easy for us to forget that permanent email addresses used to be prestige things.

Hotmail with its simple tag line - get hotmail, free web based email was a pioneer.

For me, it was my very first personal cloud based service. At a time when those who had email accounts had them through thick clients like Eudora. It was a big deal. I still retain my hotmail account for sentimental reasons.