Try disableing UltraPeer capabilities in LW. Go to Tools>Options>Speed, tick the box by "disable UltraPeer Capabilities" and click apply. Sometimes this will cause problems with connecting, especially for those on dial-up.
For tips on setting up LW to work with a dial-up connection, read through this thread(Grandpa's and LOTR's posts):
http://www.gnutellaforums.com/showth...threadid=48906
AOL's anti-spyware(Pest Patrol) may be causing you problems. Try allowing exceptions for LW or disable it. Though it usually deletes LW so that might not be it. Some info here:
http://www.gnutellaforums.com/showpo...71&postcount=6