Yes, delete the .limewire folder. You must've used a much older version of LW at some stage, that's the old prefs location. After you delete that folder & restart LW, you should see the LimeWire folder within Application Data from now on.

Your SB5101 is just a modem & doesn't seem to have a firewall. Do you have a router as well?

Try this link for a tutorial about configuring the PC-cillin firewall. You have to click the link at the bottom of the screenshots to see each successive page.
http://www.leeindy.com/firewall_pccillin-1.shtml

You could also try disabling that firewall & configuring the XP firewall instead. See if that makes any difference You can try adding the listening port number to LW's manual port forward box (they both have to be the same number)...I don't really think it'll help but you never know! Since your connection is fine (all green bars) I would've thought you'd be able to see search results. Being firewalled doesn't necessarily mean that you can't search or download.

Update your Java, that won't hurt. Use the JRE offline installer & remove your old Java version before you install the new one.
http://java.sun.com/javase/downloads/index.jsp