I have LimeWire download to a folder in My Documents which I have custom settings for in Windows XP (Selected icon for folder, changed layout inside) but everytime I launch LimeWire the settings go back to default and my icon is switched back to the boring folder. I read somewhere that LW "creates" the folder it downloads to everytime it is launched? If so, that would be erasing my settings, but if not any advice on how to get my settings to stick would be appreciated.

LW doesn't create a new folder every time it is launched unless the default incomplete folder is missing. When you set up the LW dwnld folder (as in Tools-Options & Saving) for the final dwnlded files, LW creates an incomplete folder. If you attempt to manually rename, move or delete this incomplete folder, then it could cause LW some problems & probably its defensive action is to re-create the folder. Adjusting the incomplete folder's name (& possibly icon) 'might' have the same effect. Renaming, moving or deleting the dwnld folder would have the same wffect as above. As for changing the view settings of the folder, I'd guess that is more-so os related! It certainly doesn't happen on mac os's.

Under View in Windows, did you use the Customize this folder... wizard or do it manually. The previous might be better. This would aply to either the Incomplete or LW Dwnld folder.

I customized it myself. Several times. Restarted with it, etc etc, it works fine and keeps my settings until I open LimeWire.

Nope, didn't fix it.

I can literally watch the folder icon change when I boot up LimeWire.