I just looked at some of the documentation on the itunes feature in limewire.
It sounds very much like this could be the cause of his problem, since it shares it not only to itunes, but other players/programs that have a similar feature. I just never thought to look under the "itunes" header in the options, if I had, I'd have seen that it actually describes something like this exactly, that is, if his neighbour only saw the playlist, and didn't actually dl the files.

It also explains the way he discovered the user name, I just saw on my own comp. that the default share name for this is "(windows user name)'s limewire tunes"