Generally speaking, a music server should:
It currently works with iTunes 7.0.2 as well as the current 22.214.171.124 version.
iTunes version 126.96.36.199 can be configured both as a server and a client in order to play remote tunes.
Unfortunately remote maintenance of the library is not possible via the current iTunes protocol (but workarounds are available).
The Slug can be configured as an iTunes server, using the mt-daapd package.
For library maintenance, export the mp3 directory from the slug and mount it on the PC/Mac; at the lower limit you can manually store here files/directories or, even better, you can configure iTunes on a client machine to use that directory as a music store and have acces to all iTunes nice features to organize your music library.
Even with a slow disk (4200rpm) and a large music library, performance seems not to be a big issue. [ilg: I use the slug to store more than 6000 songs; mt-daapd starts in 3-4 minutes and, when queried by iTunes, returns the full library list in about 15 seconds].
iTunes can remotely play music on your stereo using the Airport Express hardware.
mt-daapd also allows the various Roku Soundbridge players access to your music.