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with it's network drive capability, does anyone know if you could set up your iTunes directory on the network drive so all Macs in the house use one common directory?
That would work fine. You will also need to put the iTunes Music Library.xml and iTunes Library database file on the hard drive and set aliases to each of them in their original location on each of the computers. Without this changes made to the library and play counts would not update automatically
You put the library and database files on the external drive. Then you create aliases of those files and put a copy of the alias on each of the machines that are going to access the files. Once the aliases are on the computers you can rename them so they don't say alias, and when you open iTunes it will look at the aliased files in your home folder and access the actual file on the network drive.
You can put the Database and Library file anywhere you want on the external. Put the aliases exactly where original Library and database file were located
As for speed, how was the G4 titanium connecting to all of the other computers? Your best speeds would be if everything was N and in a decent range of the router