I've been using Skydrive for quite a while now and haven't had any issues...
I'm pretty sure all cloud storage programs have the same type of rules, it's usually halfway down in that long list of do's and don't right before the box to click "I agree to these terms". I know for sure Google Drive, Amazon's cloud program, and iCloud all have the same 'inappropriate content' rule.
I doubt any company wants to take responsibility for being caught with illegal material in their servers (or however the clouds work), so they are trying to cover their butts.