Mark,

I'm a little confused by the situation you're describing. So let me see if I understand what happened:

You installed LW 2.7. You had a large number of temporary files in the incomplete directory. Initially there were no downloads in the download window. (Any active downloads from 2.6 were lost.) You select a thousand incomplete files from the library and click "resume". LimeWire kicks of 1000 downloads. Most of them are queued by LimeWire, but some enter the requery state. LimeWire runs slowly. The downloads.dat file grows very large then shrinks. Deleting downloads or incomplete files and restarting LimeWire does not help.

What's the size of your download queue? (Tools->Options->Maximum Downloads) Note that by "download queue" I'm referring to the downloads that say "Queued" because of LimeWire--not those that are remotely queued ("Waiting in Line").

Thanks,
Chris