HI! I also have a Mac running OS 9.0.4

RE: Shared Folders
I too an unable to launch docs/files from Limewire, I too must find them on my hard drive to open them. Sorry, I don't know why but that happens to me too.
If you are only sharing one folder I dont know how to delete it, then share it again. I think you must always have one file shared at all times. You can always make a different folder (maybe call it "public_dir" or something like that), share it, then delete and restore your "shared" file. Hope that might help!

RE: Sharing MP3s
I don't think you need to do anything to make a valid mp3 file able to be shared by limewire. I have mp3's that are saved as greyamp docs, quicktime docs, and just plain docs. They are all in the same (shared) folder and they all show up in my libraries ok.
You mentioned using MPegger as an encoder. I am unfamiliar with this program. Might I suggest you try encoding with apples iTunes? Its free and available at http://www.apple.com/itunes/ - or for more MP3 stuff that is Mac-specific might I suggest checking out http://www.mp3-mac.com
To see if hte problem might be in the way MPegger is saving your files - Try encoding a song with itunes and then put it in your shared file. Open limewire, let it get connected, then go to the "library" tab at the top right. Click on "shared" and hopefully your file will show up in the column to the right. Remember to try "refresh" if it doesn't. Hope that might fix your problem.

Good Luck