Ok
When setting up my new machine, I used my gmail.com email address as my Microsoft Account. I have now realised I actually have a hotmail.com account that I completely forgot about and I would like to use that.

Ok read the help - aliases... try that. No good - cannot use a hotmail.com address as an alias!

SO how do I change this account to be referencing my hotmail.com account rather then my gmail account in as painless way as possible. In my user account I have 100gb of videos/music in my iTunes Library, 100gb of games in my Steam library and about 50gb of assorted guitar stuff in my user account.

I am quite au fait with pc's etc so if if it involves file copying etc then all ok, I just would like to get the gmail account out

Go to the Settings charm>Change PC Settings>Users. Click "switch to a local account".
When you sign back in, go back to the same place. The button will now read "switch to a Microsoft account". Click it, and sign in with the account you want.