1. Yes http://www.limewire.com/english/content/ftc.shtml

2. You insensitive clod! You don't want me to share my poems and pictures of my mother's house and garden? Sob . . . .

3. Just share non-infringing material--there's lots around and it's fun to find. Also, keep tabs on laws affecting filesharing in the USA at http://www.eff.org/
You can also avoid being a leech by sharing your bandwidth by allowing LW to run as an Ultrapeer (will do so automatically if your connection is good enough and properly set up).

4. Not by LimeWire

cheers . . . and welcome to the forums.