I'm using 3.18.0, and molotov's work fine. Fire spreads, in fact I've used it to break into buildings without getting a B&E charge, and the weapons themselves work fine. However there is a problem with them. When you equip one molotov on a person, it counts as an empty weapon. You need to give 2 molotov's to a person for them to throw it. I just did a quick test, and it seems that a single molotov can be used repeatedly. In addition, a single molotov does NOT cause fires.
So to sum up my quick testing:
A single molotov equipped on a liberal counts as having no ammo, does not start fires, and does empty ranged weapon damage on impact. Used this way, they never run out of ammo, and never needs to be reloaded.
Multiple molotov's equipped on a liberal act properly, setting fire, disappearing when out of ammo, and dealing damage.
Edit: I'm using LCS win32 3.18.0 on wine on linux ubuntu
The problem seems to be that the first molotov equipped is being treated as a gun that defaults to an unarmed attack that uses the same flavor text when unarmed. I just did several tests, and head and body shots did not result in instant death like it should while fighting with a single molotov. However, adding a second molotov to the liberal fixes the problem. However, you lose a the first molotov, since the game seems to be counting the second molotov as a clip, and when the molotov weapon runs out of clips, it disappears.
So the first molotov gets equipped as a pistol, and does empty pistol damage without ever using itself up or setting fire to anything. The second molotov is the first clip for the original molotov weapon, and once that clip is used up, it disappears.