If you already have a domain you can redelegate it Office Live.  Office Live offers redelegation because it is faster than transferring the domain.  This means the domain will stay at its current registar, and you will be responsible for any domain renewal costs.  Domains at GoDaddy vary in price but generally are about $10/year which is slight cheaper than what Office Live offers domains, which is $15.

Steps to Complete in Office Live

1.  Log-in to Office Live as the owner (this is the account that used when you signed up), go to More, Account Management:

2.  Go the Domain Manager and in the Domain Manager click User Your Own Domain Name:

3.  Enter the domain name you wish redelegate, the TLD (top level domain), choose the type of redelegation you want, Redirect entire site, redirects both your site and email, while Web site only redirects only your website and not your email, you can choose to do a full redelegation later.  Click Confirm.

4.  If necessary enter your Contact and Billing information and click Complete my Order.

5.  The domain should now be listed in the Domain manager with a status of Redelegation Pending.

Updated July 10, 2009

Links

GoDaddy

Office Live Resources

Steps to Complete in GoDaddy

1.  Log-in to GoDaddy and go to manage domains, select the domain you wish to redelegate

2.  Select Custom namaeservers and for nameservers enter: ns1.officelive.com and ns2.officelive.com.  And click OK.

3.  It can take up to 72 hours for the redelegation process to complete, though generally it only takes a couple hours.  Once the status in the Office Live domain manager says Secondary - Active you can manage the domain, change properties, as well as make it primary.