Oh found the solution.
Go to LW's preferences folder, find the limewire.props file
open it (probably preferable to open with WordPad so it keeps its formatting) and search for
scan, probably find a line saying do not warn about cannot scan. (WARN_DOWNLOAD_SCAN_FAILED=false)
. . (or any other line that has scan mentioned, or (NUM_AV_FULL_UPDATES_FAILED), remove them.)
Replace that line with:
VIRUS_SCANNER_ENABLED=false
That will fix it.
Not only that, but it also fixes the iTunes transfer problem.
I discovered the answer by turning Windows 7 date back to December 2010, installing LW 5.5.8, adding a copy of my old pro key document so LW 5.5.8 worked as Pro. I went to configure options and disabled
virus scan option. I then copied this line from the LW 5.5.8 props file to Windows XP LPE props file and LPE downloaded files fine. No scan issue and for first time in months iTunes copied the file fine. I will add this line to all the LPE and LW 5 versions we host.