What you're doing (running a desktop application on your server, i.e. iTunes) is unsupported and not recommended. iTunes is particularly problematic in your scenario because it's incapable of sharing it's library with multiple instance of the software, whether running on different machines or the same machine simultaneously in different sessions. In your environment, it's actually not too difficult to corrupt the iTunes library to the point where you have to rebuild it from scratch.
I think in the long run you'd be better off with more intelligent playback devices (I like the Roku Soundbridge, but anything that can consume the streams that FireFly provides is fine) and something on your server that's designed to run as a completely non-interactive service. That would allow different people to listen to different music in different rooms. Still, for now the /admin switch (or /console if you don't have the current TS client on some computer) will probably do well enough. Just remember that Windows Home Server is not a desktop operating system. :)
I'm not on the WHS team, I just post a lot. :)
