If I recall, aol security version has a spyware that will stop LW from working. I did however see some advice from another aol user about disabling this however I don't know how personally.
http://www.gnutellaforums.com/showth...&highlight=aol
Search the word AOL on the forum & you'll see what I mean.
Did you configure your firewall so it allows LW full access (advisable not to have 2 active firewalls b/c they can interfere with each other);
Firewall configuration instructions (click on link)
From your other post I understand you use another firewall. In that case, disable XP's firewall & configure the other one you have.