The simple way to find the other downld folder is to do a search of your comp for incomplete. The incomplete folder will be in the same directory level as the downld folder.
I've never run LW is classic envt., but have run it on os9 on same comp. In that case of course the prefs are stored in the os9 prefs folder.
Your osx LW preferences could be an issue. Try deleting or removing them; found here: /Users/your_username/Library/Preferences/LimeWire

Once LW is open, perhaps you should change the save location if it saves in the same location as the classic LW did. Otherwise it might be using the same downld preferences in which case ... I don't know if it makes a difference or not but it might.

Screensavers have been known to have issues. you could try to disable it at least temporarily to see if it makes a difference.