Related: the chat availability/unavailability indicator is broken (and has been for at least two major version increases and counting!) -- it sometimes isn't greyed even when the host is unavailable. Also, attempting to start a chat doesn't provide the user immediate feedback -- if it fails, either nothing at all happens, or a window pops up saying host unavailable. If it succeeds, a window pops up without the host unavailable message. The window does not appear immediately.

The behavior of just about every other instant messaging functionality I ever saw in any app on any platform is for a window to appear immediately and let you attempt to send a message, but it will alert you if the message isn't sent successfully with a bounce of some kind. Some also detect if the remote host is offline and grey out the message send typing area and send button when possible (MSN Messenger comes to mind). So my suggested fix: the window pops up immediately, and failed messages bounce somehow; the host unavailable message appears if a host is definitely not there or not enabling chat, and the menu item is greyed under the same circumstances (so the host unavailable message is for a host turning off chat or disappearing after you already opened the chat window).

Alternatively, dump the chat feature in favor of a way to exchange contact info, by making and setting a vcard or something and sharing/not sharing this as you please, and retrieving someone else's if they offer one with a standard file name or something. People can then swap emails, ICQ or AIM or MSN contact id numbers, an IRC server/channel or server/nick, or whatever and use a real messenger app with better functionality and reliability instead of one designed as an afterthought and bolted onto an app principally designed with something else in mind. Limewire (and other gnutella clients) get more streamlined and less buggy this way, by being able to more strongly focus on the core functionality, namely file sharing. Contact remains possible but the mechanism now uses the main strengths of the protocol: file sharing. Contact follow-through uses applications that have a focus on messaging, and consequently work better at it. Everyone wins.