The SC setup for iTunes is really easy. One thing you need to do though in your overall setup is to make sure that the iTunes folder is also on a share on your NAS. By default, iTunes stores this information in My Documents\My Music\iTunes on your PC. In here, iTunes stores the database, artwork, etc. The complete folder structure must reside on a share on the NAS. You can just copy it over.
On your PC, map the share that contains this folder structure. Make sure you reconnect to that share after a restart (checkbox somewhere in the drive mapping form).
Next setup iTunes to use the library on your NAS. Press and hold the shift key on your PC while you start iTunes. iTunes will present you a form with a few buttons. Here you need to click “Choose Library...”. Point to the “iTunes Library.xml” file located on you NAS.
You should do this on all your PC’s accessing this iTunes library.
In SC, go to settings. Click the iTunes tab and set the following:
1. enable Use iTunes (checkbox)
2. Point “iTunes Music Library.xml Location” to the location of your “iTunes Library.xml” file on you NAS.
3. Point “iTunes Music Folder” to the folder that contains your music.
That’s it. You should now be able to use your iTunes playlists on your SqueezeBox’s. The iTunes playlists will have the “iTunes: “ prefix by default. You can change that in the SC settings if you like.
My SC settings are:

In my setup, I have mapped drive X to the iTunes file structure (that contains the xml file) and drive Y to the music share. Each time my PC is rebooted; I first open a file explorer to these two drives and close them right after. That will force windows to logon to the mapped drives. I do this before I use iTunes so that the information is available to iTunes.