I want to delete some files that are located in the LW library/folder that is within iTunes. The LW library/folder I am talking about is located under the "source" portion of iTunes, where you can create your own playlists. Hope that is clear enough to understand?
Anyway, there are some files I want to delete, but I don't know how? I've tried to "right" click the files, highlighting it and looking for a delete, but nothing I do seems to work.

You cannot delete files from that list. It is simply a listing of what you are sharing on Limewire (more or less)

If you go to the Limewire Library you will see what you are sharing and these files can be "removed from share" ...or deleted.

WARNING ..IF YOU USE THE DELETE FUNCTION they are removed imediately and totally from your hard drive. They do not go to the trash or recycle bin.

The changes may not show up until you re-start iTunes and/or Limewire.

I hope this helps

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To get Phex Click on the Fox

Yeah, thank you. It's just some files from a previous download, how they got there I don't know? But I just wanted to get rid of them.

If you want to remove the LW playlist from iTunes, go to LW's menu bar, Tools>Options>iTunes>Sharing & disable the sharing option. AFAIK It won't take effect until next time you open LW & iTunes.