Red files aren't being shared. There's the option to share a file (right click > share file).

If LW detects a corruption in a download, you'll see a popup warning you & asking if you want to continue with the download

I don't have partial sharing turned on, which means other people can't download parts of the file as I'm downloading it (I'd rather wait until I know the file is good before sharing it) - so my incomplete files are red, too