BTW this is not the limewire site. This is a forum run by volunteers. I'm not an expert & there are some here who know a lot more than me. But we try to help how we can.
My advice is to get more physical RAM! VM is a PITA, an earlier computer I had ran so slow due to VM but I needed the xtra (psuedo) ram. With that little ram, I'd recommend you designate specific times & days to use LW with VM off. Then reactivate it for your other stuff otherwise. (ie: your HDD & bus speeds will be very slow compared to what LW requires ... so VM is not really a wise option unless a very last option. Java for 8.6 is already slow & inefficient enough without slowing things down otherwise such as with VM on a slow system.)
Yep allocating more ram to LW certainly won't do it any harm. BTW it's been less than 20 months since I used LW 2 on a G3. But there was 224 MB ram on it. I kept changing allocation of ram to LW depending upon how many incompletes, & shared files. It seemed in my situation that allocating too much ram when it wasn't needed actually seemed to cause issues. BUT I'm refering to a now very defunct version, AND I was using OS 8.5 which had an even more inferior Java version which was the root of all the problems.
Make sure your java version is at least MRJ 2.2.5:
http://docs.info.apple.com/article.html?artnum=75097
If LW 4.0.10 isn't connecting, try deleting the LW preferences folder whilst LW is CLOSED!!! The preferences folder is titled
.limewire & if you list your preferences folder by list (prefs folder found in Mac HD>system folder>Prefs folder>.limewire), you should find it at the top of the list. Then just trash it. Try with LW again & see how it goes. Tell us if it doesn't work ok. Remember, it may take LW a while to load up both your incompletes AND your shared files so give it lots & lots of time to connect. Over an hour.