Question 1

Go to preferences>Searching and fill in a low number .. I use Five. When I start a sixth search on of the others dissapears. The "Clear Innactive" button does not clear searches, it clears completed downloads and those "Awaiting sourses" Anything being downloaded, awaiting busy hosts or queued, will remain. You can clear any one search column by right clicking the title bar for that search and selecting "Clear Search"

I hope that helps.

Your other question is probably better served in the instructions for using Limewire, but basically, the default setting will share the folder you select for your downloads to go into. Many users will want to change this, and the easiest way to do this is in Preferences>sharing>shared directories. Here you can just select the folders you want to share, and remove the default folder if you wish.
Be Careful NOT to click Restore Defaults, as this restores your default shared folder and evererything else. This can all be done also from the library, but GREAT care must be used there as you might chose to delete a shared folder which will ERASE the FOLDER from your HD ENTIRELY. It is also easier to do the selection from preferences ... Windows may use slightly different terms etc but I should have given you the idea

I hope this helps I'm only a layman and I tend to leave out the most important thing. Enjoy!