It worked. I take your point about removing preferences. After uninstall I removed all folders relating to LW. I can only assume it somehow got corrupted.

Now have saved (default) files going to:

C:\Documents and Settings\Account Name\My Documents\LimeWire\Saved

Have added my iTunes folder to My Library and am sharing all on P2P Network.

I take it I wont have to add C:\Documents and Settings\Account Name\My Documents\LimeWire\Saved? Presumably these will automatically be added to My Library?