With the upgrade to 10.5 I cannot see the option to share apps under preferences sharing. Am I doing anything wrong?

I upgraded to itunes 10.5 on my Windows Vista Desktop and my wife's Windows 7 laptop as well.
On my desktop I use my login/account information.
On my wife's laptop used her login/account information.
Enabled home sharing on both the computers and authorized both the computers.
On my desktop when I open itunes and go to preferences screen and in there under sharing I don't see Apps listed anymore.
So I cannot share the apps I bought using my account/desktop with my wife's account/laptop.
By the way I am able to see music and movies across both the computers and can even share it. Just not the apps since the options is now not available under preferences >> sharing tos hare apps.
I am using iphone 4S and my wife uses iphone 4.
Any help will be appreciated.

Regarding the .dmg problem see this thread:
http://discussions.apple.com/thread.jspa?messageID=5522469&#5522469
As to the external, does the drive appear in Disk Utility? If so, can you see how it is formatted?

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