I would like to add a notice "No Microsoft emails (msn/outlook/live/Hotmail) or are accepted" somewhere in the registration page - or maybe even pre-filled in the email box itself.
I've been looking everywhere for a place to insert this in a way that looks presentable.
Any ideas?

You need to edit one file:
\components\com_community\templates\jomsocial\layouts\register\base.php
Line 55:
data-required="true" data-validation="email" data-verify="[name=jsemailconfirm]" >
make it look like:
data-required="true" data-validation="email" data-verify="[name=jsemailconfirm]" placeholder="No Microsoft emails (msn/outlook/live/Hotmail) or are accepted" >
Bear in mind that next JomSocial update might overwrite that file.

Yep I was looking at a way to do an override as this would look messy but its a good temporary measure I think. Microsoft are blocking all emails coming from dreamhost hosted sites

You can always add another <span> element on line 52:
<span><?php echo JText::_('COM_COMMUNITY_EMAIL'); ?> <span class="joms-required">*</span></span>
so it looks like:
<span><?php echo JText::_('COM_COMMUNITY_EMAIL'); ?> <span class="joms-required">*<span class="email-warrining">No Microsoft emails (msn/outlook/live/Hotmail) or are accepted</span></span></span>
Another solution is to make language override for COM_COMMUNITY_EMAIL to include more text but can brake visual integrity of that form. Maybe that will make some other string on other form messed up too.

Hmm tried the live 55 code change but with no apparent effect on the registration page =(

It works in my case of jomsocial default theme. If you use other theme then you need to find where to modify php.

Thanks for the info!
The screenshot is with the line 55 hack?
That is very weird as im using the default jomsocial profile... something strange is afoot!