Wait, so I'm having trouble understanding your post. Did the employee leave on not-so-good terms, and is doing this, or is it the employee's ex?
Either way, you know the identity of who is responsible, or at least, can get it easily. A letter from the company lawyer or a visit from the police will solve this pretty quickly.
From a technical standpoint, even if you block Hotmail, they'll use something else...there are plenty of free e-mail providers out there. And if you have the technical know-how, you don't even need your own account, you just need to find a mail relay that's open.
Like Fuzz said, there are easier ways than trying to play Internet Whack-a-Mole. (I'm stealing that phrase and filing it for safe-keeping, Fuzz!
)