Your preferences folder contains all your settings from tools > options. If there are settings you're not sure of, note them down before you delete the folder...you'll have to go & set things up again afterwards. Deleting the folder won't hurt anything & it may also help with your other (internal error) problem. LW must be completely closed (check in task manager) before you delete the prefs!

Your incomplete files will refuse to reload if your computer's crashed or if you've shut down before LW is properly closed. You can go into your LW library & click on Incomplete Files, highlight a file & click Resume but the bad news is that the file will begin downloading from 0%. If you copy the downloads .dat & .bak files to a safe location before you shut down your comp, you can then copy them back into your incomplete folder & the download will resume from where it stopped previously.

I'd try to sort out whatever's going on with your LW before downloading if I were you though