OK, based on bfollett's suggestion, after only 10 minutes the fix was actually quite easy. Install BS, then place the BSLoader within the BS program folder.
bfollett copied the entire program package across from XP, but that's not necessary. And I did not have the same system startup issue as a result.

You can install the BS version from the BearStart version, but ignore the BearStart program.

At least for now, I have attached the BSLoader below to this post. You will probably want to create a shortcut to BSLoader to your desktop and remove any shortcut to the actual BearShare Test program. Oh and I would recommend setting both BSLoader and BS to Run as Admin. within properties and perhaps BS as XP SP3 compatibility.

You will probably want a hostiles blocklist also. I updated them couple days ago if you're interested.

So in summary, seems the problem is neither the BS program or the BSLoader, but the installer they came with. So with this in mind, either File_Girl or I can try putting a new installer together. File_Girl may need to update her installer software to cater for Windows 8, I updated mine a week or so ago.

As for Windows 8, well only first few hours of use. But accidentally click on something and it can be hard to get back to where you were lol. A severe lack of back buttons or options. At some stage I might get rid of some of that internet hyper trash lol. And the so-called side menu is often difficult to get to show itself. A bit of tongue in cheek humor.

Edit: just one issue, BS suddenly stopped working out of the blue after about an hour, so I was forced to restart. But I lost internet connection minutes later so that might have been related.

Edit again: I have thrown together an installer for the BS and BSLoader which includes basic settings file (including forced ultrapeer) and a connection file. See below.

Edit yet again, I packaged this BearShare 5.1Beta (all Win,32+64bit (new).zip with the BS installer. This one has BSLoader shortcut abilities for the installer.