Just upgraded my version of LW (to 2.8x), and it's been acting flakey. The previous version was basically OK, but, with the upgrade, I've been getting the screen redraw problems again (e.g., grey screen, no buttons, file window blanks, nothing can be selected, etc.). This often necessitates that I quit and re-run LW.
Just today, I tried to run iTunes while LW was up, and received an error that not enough RAM was available. I checked "About this computer...." and found that, although I had set LW to about 40MB preferred memory, it had taken 80 MB (though the indicator bar said that it only about half that was being used).

This is a Powermac 8600/300 with a Powerlogix g3/400, 160 MB RAM, OS 9.1. Another 64 MB is on its way, but I'll be getting a new Mac within the next few months, so that'll be as far as I take this one. Yes, I know that LW needs plenty of RAM, but my concern here is that it's taking more than was set for it.