Both my OSX & Application folders are set to allow Admin & System to Read & Write. LW has read & write permissions of each individual Administrator account.

Try a safe boot, ie: hold down shift key as you boot up until you see the Mac icon. This way of booting up keeps only the most basic extensions, etc. to be enabled by the system. Repair Permissions using Disk Utility. Then try deleting LW. (Safe boots take much longer to bootup.)

Another option might be starting up with an OSX bootup dvd disk.