Mac mini server as a media server

Hi guys, my first time on this forum. Just purchased a mac mini server with dual HDDs. never used a server before. Have hooked it into a small home network.
1. Want to store iTunes music and videos on the server so that macs on the network can use the server to independently play music via the toslink mac mini output to a DAC, etc. Want also to play videos in the same fashion via the HDMI into a receiver.
2. Use Time Machine to back up to the mac mini server, but it appears to only allow backup to one HDD which is not sufficient capacity. Have hooked up another 500MB portable HDD via firewire to the mac mini, but not sure of the best way to configure it - back up one computer to it? How? or maybe use it to store the media and back up to both HDDs? How?
As you can no doubt tell I am a novice, but would appreciate any help. Thanks.

Create a new user, and import the music into his itunes. Enable sharing in the itunes preference pane. From then you will see the <username> playlist show up on other Macs looking for shared libraries (this must also be checked on them). Have this user auto login, and add iTunes as a login item (accounts preference pane) so it starts when the Mac boots. This way, you can listen to music from other Macs, or choose via an iPhone. I also use Front Row with an Apple remote control.
Not really sure why you can use the second drive for Time Machine. I use FileSync 2.2 to just copy the iTunes folder over and keep it synced, as I don't really need a full backup.
Log in as an admin, go to the Server Preferences and turn off any services you're not using.

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