It sounds like there might be a couple of issues going on.

On the preferences side, do you have multiple user accounts on your machine? It sounds like LimeWire is trying to write to a file/directory that it does not have permissions for. One solution for this would be to reinstall LimeWire in a directory where you have permissions, and then add your old shared directory to your list of shared directories in the options window.

As far as continual redraws, we are aware of this issue in the case where you try to expand a group as more search results are still coming in. This should be fixed in the next release. Are there other cases where continual redraws will occur?

As far as the downloads not going to your shared directory correctly, it sounds like this might also be an issue with user permissions. Is it possible that you do not have permissions to write to your save directory? We're going to change the behavior of this in future releases, so this issue should be fixed. For now, though, reinstalling to a new directory would probably be the best solution.