Yes it's a scam.
The fact that it comes from a free email account (@optonline.net) and asks you to respond to another free email account (@live.com) should tell you immediately that it's a scam.
Legitimate companies and organizations always have their own private email accounts ie.: Service@PAYPAL.COM, Contact@EBAY.COM, CustomerCare@COCACOLA.COM, etc, ... because free email accounts don't provide enough storage for emails from their customers and also free accounts will not guarantee anything in terms of not "losing" emails or provide backup for anything stored so legitimate companies, charities, or er, "Lottery offerers" would pay for their email service...not to mention branding.
Coca-Cola would want you to know that this email came from THEM, not JoeAnybody@Hotmail.com.
@Live.com is windows new free offering for anyone who uses MSN. It's the same exact thing as their Hotmail accounts except they offer a little more space and are called Live.com.
This isn't to say that any common scammer or thief can't just go right out and buy a domain name like "UK_E_Lottery.com" (it would only cost them about 10 dollars if they're in the U.S.) and then acquire an email service (only about 20 to 30 dollars a month) to ensure their emails end in "Mr.ColesDesk@UK_E_Lottery.com" but they usually don't do this. -Usually-.
The reason being is that when you buy a domain name you have to give them a valid credit card and give them a valid address that matches the one the credit card is billed to. Credit Card thieves usually don't know the address the card belongs to because they're just stealing the numbers off of a card (like a waiter could do) and not actually stealing that persons wallet which would also have the victims drivers license with address in there too. People notice when their wallets are missing so their quick to cancel their credit cards...they have no idea that the waiter has copied down their card info. however, so ...anyway, scammers don't often buy a domain name for this reason. They certainly don't want to use their own address and credit cards because they'd be easily traceable back to them ad their scamming, and they won't use someone else's because they probably don't know the address of the stolen card they'd like to use.
This isn't ALWAYS the case however, so, be very careful.
When in doubt of an email always use the search engine Google.
Put in @optonline.net or @Live.com and click around a bit. If there isn't a page for a company or a charity or a "Lottery" office in the top 3 listings that come up on Google then, it's most definitely a scam.
So Good Luck and remain wary of "all things emailed"