I've been trying hard to rank well for a particular keyword in msn and I noticed msn favors blogspot too much. Is there anyway to compete with this blogspot sites?

Yep, MSN loves blogs. Not as much as they use to, but you will still see a lot of blog spam. Problem is the MSN favors keyword rich URL's, and you can get some good ones through blogspot.

Just continue to do good seo and you will overcome them. MSN will continue to devalue blogs over time.