Your MSN Messenger should be updated to Windows Live Messenger.
The exact cause for the problem is unknown, but most likely it’s due to corrupted Windows Live Messenger related files. To resolution to fix the all contacts appear offline issue is simple. Just go to Control Panel -> Programs -> Programs and Features and select (highlight) Windows Live Essentials 2011. Then, click on the Uninstall/Change button. In the Windows Live Essentials 2011 setup window, click on Repair all Windows Live programs to reinstall WLM Messenger 2011.