Ok I've got Limewire running now.

Know what the problem is?

Don't let the system updates run.

I'm running now on 10.2.4 - no upgrades whatsoever. It's as it was installed from the CDs.

Limewire launched properly, it let me configure it and let me browse the network all glitch free.

Some file must have gotten corrupted in Apple's database because when I first tried Limewire I was already upgraded to 10.2.8 via the automatic system updater that runs after install.

Anybody know Steve Jobs' phone number?
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edited for update - I tried running the upgrades once again. Only OS, Java and Quicktime upgrades, nothing else.

Sure enough, Limewire would not load and run at all under 10.2.8