The wire going to the outlet is hot. The wires are all hooked up correctly, when I plug something into the outlet, it is no longer hot and does not work... what could be wrong?

Bad outlet.

If you want to do things the best way possible, you wirenut the existing wires to a pigtail and attach the pigtail to the outlet. When you do this failures at an individual outlet will not affect outlets downstream.

You can still have a failure before that outlet for the above reason. Any loose connection can cut off power when a load is drawn.

Outlets are cheap.

You may have lost your neutral. Test between black and white wires, if you get no reading then the neutral is dropped. Could be a loose connection at a previous receptacle or at the panel.

Doubt the neutral is lost, since the outlet is likely warm to the touch. That''s what I think he means by hot.

You could be right but boy, I sure hope folks don't use the term hot with electrical stuff when they mean warm to the touch. Buford how's about telling us more, try my test before you post.