Mail hangs - New install

My sister gave me her 2009 MacBook Air. I've cleaned it off, installed Lion, then did the upgrade to Mountain Lion from App Store.

I cannot get Mail to setup my son's iCloud (mobile me) address. It just hangs and gives spinning beach balls all over the place. This is not an upgrade with any previous mail. The MBA was setup clean. I setup my son's iCloud account in prefs. I brought up mail, typed in his email address and it appears to find him then the beachballs start. Each "continue" or "create" button is met with 5-10 minutes of spinning beach ball. This is on creating a new account.

I've force quit, I've rebooted, I've removed the stuff in the mail directory. It simply does not work. Any ideas?