To get JSPWiki working well with Mercurial,

Configure JSPWiki to save files in the directory of your repository#

jspwiki.fileSystemProvider.pageDir = /Users/username/sites/dsawiki/
jspwiki.basicAttachmentProvider.storageDir = /Users/username/sites/dsawiki/

assuming you have done something like

$ hg init dsawiki

from /Users/username/sites.

Configure the page provider class#

jspwiki.pageProvider = VersioningFileProvider

Tell Mercurial to ignore everything in OLD/#

Create a file in dsawiki called .hgignore and populate it with

# use glob syntax
syntax: glob

OLD/*

Add and commit this file to the repository

$ hg add .hgignore
$ hg commit -m "ignore wiki version history, we have hg for that" .hgignore

Now you will have the best of both worlds. You can periodically clean out the OLD/ folder, or just leave it until it becomes an issue but you will still have hg's history. Even better, hg's history will be much smaller.