Yes I'm certain its enabled. Sometimes I will get alerts fine. Other times I will check and see I have a message I haven't touched and is marked as read.
I think it has something to do with how quickly I have it configured to mark a message as read in the settings in outlook.com. Since I almost always have a tab open my guess is a new message arrives since I have outlook.com configured to show highlighted message and mark as read immediately those combinations is how I'm missing it.
If I could find the setting to change the read option to something like 5 seconds or after the selection changes that may help. Problem is I can't find those settings anywhere.