Okay there are 2 parts to this issue.
First, when I sync the contacts of my phone to outlook using the Outlook Hotmail Connector after setting the birthday of a particular contact on my phone(Let us call him John), the birthday will always appear as one day earlier on my outlook contacts. So if I set it as 5/12/1982, it will appear as 4/12/1982 and so on. This only occurs if the birthday is synced from phone to outlook, and not the other way round. Thus, if I set John's birthday as 5/12/1982 on Outlook, it will appear as 5/12/1982 on my phone.
Secondly, if I correct the birthday on Outlook and sync again, I will appear offline to the contact on Windows Live Messenger. I will then have to go to WLM and choose "Appear online to this person".This is a minor issue, but irritating nonetheless.