No, that's not it.

To answer this, I have to explain a bit about how the Gnutella network works. (This is actually a basic description of the basic Gnutella network... I'm not going into Ultrapeers or pong caching or anything.) First, there are no dedicated central "servers" as such. When you connect to the Gnutella network, your computer becomes both a client and a server on the network (which is why a Gnutella client is really referred to as a "servent"... SERVer, cliENT... get it?). You connect to others and others can connect to you (not so much with LimeWire anymore, but with many other clients this is still how it works). So, what you are seeing when you're noticing your DSL connection seemingly downloading nonstop is all the traffic going to and from your computer.

As an example, take a search for instance. In its basic form, when you perform a search, your client knows to send that search request to every one of the nodes you are connected to. Those nodes then pass that search on to every one of the nodes they are connected to and so on until the packet expires (which I won't get into how that's done). Even if a node doesn't have the file that the search is looking for, it has to pass that search packet on until the packet expires. The same thing goes for all other types of packets. As a node on the network, your computer is responsible for routing other peoples' packets even when you're not actively doing anything on the network yourself. That's the whole secret to the Gnutella network.

Normally, with any other client, this would amount to a lot of traffic, but LimeWire has a lot of other neato peachy keen features added to reduce the amount of bandwidth required (like Ultrapeers). I'd give you some idea of the bandwidth consumed in an hour, but it really does vary according to the number of connections you have to other nodes and whether you're doing anything else at the time (downloading, searching, etc.).

I'm in a similar predicament as you though... I also have a monthly bandwidth limit. I found a little program that helps me keep track of just how much I've transfered in a month. It's called "NetStat Live" and it's by a company called AnalogX. It's completely free and you can find it here.

As for your friend on the modem. It's entirely possible (and the LimeWire folks would be the only ones to be able to confirm this for sure) that modem users have too little bandwidth available to be able to function as a server... besides that, they're only allowed a very small number of connections to begin with. The more connections you have, the more bandwidth you need to service those connections.

Hope that helps.... let me know if anything needs clarification.