Hotmail - spoof bot or hack?

[doodah]

A bit stumped about this. Is this some sort of weird spoofing trick or an actual hack, a friend of mine is after help regarding his Hotmail account.

Getting fake emails purportedly sent by my own Hotmail account address to the same Hotmail address. The fake emails even have my profile picture on them. The main body of the email purports to be from PayPal, various banks etc. Obviously I haven’t clicked any of the links; but is there anything I can do to sort it beyond getting new email account?

These emails aren't showing in his outbox which I assume means it's spoofing. He's changed his password and run an anti virus/malware scan. Any ideas? And any solutions other than creating a new account?