It was not a virus, some virus scanners decieded to consider this a trojan because it was capable of downloading other programs and installing them without asking the user. - By itself it may not have been dangerous but it was a big security risk.

The reason 4.0 is free of any bundles is obviously a new business strategy. There are apparently enough Pro customers to finance further development and by not bundling any software, LimeWire gains credibility and even more users. Ever since spyware became an issue for the average user, bundling software became just bad advertising.

Personally, I don't believe that spyware/adware is really that bad, if you know what your doing, you can always get rid of it again and it's usually not really malicious. It may try gathering some information about surfing habits but you can do the same and more using a couple of webservers and a lot of cookies. If you ever wondered what google is putting into all that cookies it stores in your browser or where those fastclick/hitbox cookies come from, they are for tracking surfing habits, storing which searches you enter in google, which google ads you click. With its market-share, Google can monitor surfers on every website that displays Google ads.