This is a known issue with the JLU installed with SMSDom 8.0

It is fine to clear the downloads folder manualy.

To solve the issue we recommend turning off the caching feature.

1.  Run the Java LiveUpdate configuration editor.  If using a 32bit Windows operating system type:
     Java -classpath "c:\program files\common files\symantec shared\Java LiveUpdate\jlu.jar" ConfigEditor
     or if using a 64bit Windows operating system type the following command in:
     Java -classpath "c:\program files(x86)\common files\symantec shared\Java LiveUpdate\jlu.jar" ConfigEditor
2.  Select Add New Property
3.  For Name type:  cacheMode
4.  For Value type:  false
5.  Select Save

From:
Title: 'Java LiveUpdate Downloads folder grows uses too much disk space.'
Document ID: 2009082007544354
> Web URL: http://service1.symantec.com/support/ent-gate.nsf/...

If you are unable to open the configuration editor you may need to reinstall after installing the JCE

Title: 'LiveUpdate Does Not Work With SMSDOM 8.x'
Document ID: 2009060407432354
> Web URL: http://service1.symantec.com/support/ent-gate.nsf/...

I am unsure if turning the caching off will clear what has already been cached but if it doesn't you should be fine to just clear that downloads folder manually.