Don't be a law breaking jagaloon and you should be fine.
Edit: My take: just because a folder is private doesn't mean you couldn't suddenly make it "public", making Microsoft the proud host of illicit pornography. I say illicit because I'm sure there are, depending on the state, laws to abide by which you must have a "18+" warning/prompt in order to access it.
Edit 2: And, if you really don't want to MSFT to see your files, but still want to use their free service, use a TrueCrypt drive. You will lose the features things like opening documents on devices, etc, but you get the additional protection.
Edit: My take: just because a folder is private doesn't mean you couldn't suddenly make it "public", making Microsoft the proud host of illicit pornography. I say illicit because I'm sure there are, depending on the state, laws to abide by which you must have a "18+" warning/prompt in order to access it.
Edit 2: And, if you really don't want to MSFT to see your files, but still want to use their free service, use a TrueCrypt drive. You will lose the features things like opening documents on devices, etc, but you get the additional protection.