This happens to me in Ubuntu 9.10 when I try to login as "hidden" in an MSN 
account:
1) I start Empathy.
2) I open the combo box and select "Hidden".
3) I am logged in but the status is "Busy".
4) If I now select "Hidden" again then it works and my status becomes "Hidden".

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Setting status to 'Hidden' changes status to 'Busy' instead
https://bugs.launchpad.net/bugs/257190
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