ok, here's the story...

Had Limewire working great, no problems. Limewire told me it had an update available, so I downloaded and updated. Since then, I have not been able to connect again. I will get 1 green bar & sometimes it might jump to 2 or 3 bars, and then it will drop back down & start all over again.

Here's my specs:

Windows XP SP2 5.1.2600
RAM: 2G
HD: 300G
Internet Connection: Directly to modem via USB (same with network cable).
Service Provider: CMA Cable
No firewall except windows (disabled or enabled has same effect)

What I have done thus far (in no particular order):

1. Removed the settings folder.
2. Removed Limewire altogether.
3. Scoured the registry and removed anything I could find that was part of
limewire.
4. Made sure the ports were set correctly in Limewire and in Windows Firewall
5. Shut off modem & let it sit for about an hour disconnected from cable and
power
6. Ran the port test in one of the threads, it passed.
7. Tried to download and reinstall limewire.

Here is where I am now...

The Limewire Online Installer can see available sources to download from, but cannot actually download from them.

I can download and run the offline installer, but the problem with the online installer has me scratching my head.

Also, when I installed via the offline installer, limewire says I have a firewall enabled, but I don't.

Any ideas?

The offline installer is usually recommended here...fewer problems!
Your LW might be detecting a firewall within your modem, what's the brand & model?

My modem is an Arris CM450A

But, why wouldn't this firewall be detected before if that is the case?

I honestly couldn't say why one version detects a firewall problem while another one doesn't! Updates effect people in different ways & a few people have had problems recently, since updating to the latest version. Since you're only running the XP firewall, have checked it's configuration & disabling it doesn't remove the firewall icon, you can probably rule that out as the root of the problem.
I can't find out much info at all about your modem, if it has an internal firewall (e.g. NAT) you could look at enabling UPNP or port forwarding. There's a lot of info about this within the link below
Connection problems? Check here first!