The preferences folder isn't called 'preferences'
If you look in C:\Documents and Settings\Michael\Application Data\LimeWire...the LimeWire folder is the prefs folder. That's the one to delete.
And if you've had way older versions of LW installed in the past & look in C:\Documents and Settings\Michael\.limewire...the .limewire folder is the old location for the prefs folder. If you have a folder named .limewire - delete that too.
When you set up port forwarding, did you make sure to set up a static IP address first?