Is Limewire legal? And what about those "transferred" files? That all depends on what you do with the software. Some artists make their music freely available on file sharing services, in order to gain exposure or because they just want to give it away for free.
Obtaining music on those terms via Limewire or a similar P2P service is perfectly legal and even encouraged. But copyright laws protect the creators of original works, such as music, movies, photos and artwork. Individuals who reproduce, distribute, or receive copies without the consent of the owners may be in violation of copyright laws. To put that in context, if you copy commercially available music or video files without paying for it, you're probably breaking the law.