Well needless to say it did happen as i described, I was working in Photoshop and Dreamweaver and had Limwire on in the background only downloading 3 mp3 files... when 2 of the downloads where complete (a third one was finishing) the beachball showed up ( I was trying to access the music in my shared folder but it wouldn't let me into the HD cause of the activity) and then when I accessed my home folder not only was everything gone in there but so was everything on my desktop... I have also noticed all my sound settings are gone as well as in I have no more sound, very weird. Never have come across this and the only thing I was doing out of the ordinary was using limewire. I did have the checkbox in LW selected to auto add to itunes, and itunes sometimes will start playing these automatically BTW! So at this point I thought I could get away with just putting on the stuff that was erased ( i keep backups) but seems like there is more to this... missing my sound being one of them.. I'm slowly finding other things it touched like my mail and FTP (which of course all the settings are in my Home folder).

On the other hand I do have a Firewire drive hooked up all the time to this machine, is this similar to the FW problem you mentioned? Let me know, for now I'm sterring clear of LW on this user account, but I wanted to gives everyone a heads up if it does indeed turn out to indeed be a malicious LW thing.

Thanks for your responses!