Um, what? Citation needed.
They scan and flag pictures you send via outlook.com and hotmail.com, and probably upload to skydrive. If they didn't, they could be legally liable for distributing kiddy porn. they do not randomly scan your PC or thrash your hard drives, unless you're talking about the system indexer, but that isn't searching or flagging anything, and you can turn it off if you prefer long-ass slow filesystem searches.