Gentoo user here:

KDE-4.2.4
Kopete-4.2.4-r1
libmsn-4.0_beta5

Have recently noticed that when adding new msn/live users to kopete and authorisation in both directions is successful the new user always appears offline in my contact list. My old contacts from the kde 3.5 days are still functioning correctly.

However, the user at the other end can see me online and we can message each other back and forth with no issue, but the user still appears offline at my end....very frustrating.

Any other users experienced this lately? Is there a folder or file I can delete to reset my kopete settings?

I have the same problem, but the other way round: I appear as offline. To fix it, I had to add the contact (before it was he/she who added me, and I accepted). Maybe you can ask the person to add you again, or you could try to add him/her again.

if this is still busted, please file a bug.