Ok - after you deleted the preferences folder, did you have to go through LW's setup again & reset all of your options?

Usually, the kind of error that you posted is a Java problem. But maybe uninstalling Trend Micro has cause some conflict somewhere - I honestly wouldn't have a clue about that. I've never used any Trend Micro security.

You said in an earlier post that Yahoo Messenger was also not working - is that still out?

Shut down LW, make sure that it's properly closed (check in Task Manager) & then just for a minute turn off XP's firewall. Control Panel > Windows Firewall > check the Off radio button > ok.
Once you've had the popup warning you that Win firewall is off, start LW & see if it connects. Give it one or two minutes to connect - if nothing happens in that time then tuen the XP firewall back on.

Don't leave the XP firewall off - this is just a test to see whether LW will connect.