Iphone 4 won't let me access my Settings to reset my phone

When i go on either Phone or Settings, a bar pops open saying 'Enter the password for the hotmail account'. I don't know the password and it won't let me click on the Phone/Settings or the bar. I have to double click the Home button and go onto another app to get off it! How would i reset my phone if it won't let me go on the Settings? And when i manage to figue out how, when reseting my iphone 4, will it erase the data in my apps, for instant, my instagram account?

Do a standard reset where you hold down the power button and home button down at the same time until the screen goes blank. If the Apple logo does not appear after 30 second turn the phone back on normally.

Those prompts should also give you the option to cancel.