Thanks everyone! I already had a Microsoft account for XBOX, but I changed my primary alias to an @outlook one because I want to move eventually to outlook from gmail. It just sucks the labels/folders don't carry over.
Anyway, I've had trouble with syncing stuff with the desktop app/media player, I can't believe they didn't just rename the Zune desktop client - but it seems to be working...as well as it's going to. I just don't understand how they expect casual folks that don't go to sites like these to sync their stuff....
If needed I'll do a factory reset - you made me feel better about that option, and now that texts are backed up I don't have to worry about losing anything!