Q: iTunes Media Folder location - on a data parition

Changing preferences settings only tells iTunes where to start storing new additions, not where to find media.  Your primary problems stems from not keeping all iTunes library files in the partition and only having media files there.  Your SnowLeopard library is not using the same data location information your Lion area is using.  Without going into long details I feel in your instance it would be best to move the whole library to the partition and start iTunes while holding down the option.  Guide iTunes for each boot system to the iTunes Library.itl file in the iTUntes folder.  I guess you could try starting the SL iTUnes using hte library in its location on your Lion partition but things can get nasty when using another system's files because of user permissions problems.

I keep all my iTunes files on a separate partition which I use for data and I have removed ownership from that partition which means I never have ownership issues when using it from any account.

By organizing it should both relocate all current media as well as start using the new location from that point on.  You're mostly okay there.  Where you are not okay is iTunes doesn't look at your files directly.  It only really looks at one single file, the iTunes Library.itl file which tells it where everything is located.  You need to get both copies of iTunes using the same complete library (media + library file).  The way you do that is using the option start method.  You should only need to do that once unless for some reason the library storage drive is disconnected when starting iTunes, in which case iTunes will use the default location and you will need to option start again.

What are the iTunes library files? - http://support.apple.com/kb/HT1660

More on iTunes library files and what they do - http://en.wikipedia.org/wiki/ITunes#Media_management

What are all those iTunes files? - http://www.macworld.com/article/139974/2009/04/itunes_files.html

Where are my iTunes files located? - http://support.apple.com/kb/ht1391

iTunes 9 [and later]: Understanding iTunes Media Organization - http://support.apple.com/kb/ht3847

By the way, both copies of iTunes will have to be the same version or the library will become unreadable to the older iTunes.

There are variants to the above but I am not going to type in all the possibilities unless you say something that tells me you need a different structure.

darkhorse85 wrote:

 

2) I have to hold option/alt whist opening iTunes and select my music library then ...each time every time?

No.

Once you select a library, iTunes will continue to use that same library every time it launches.

That's because there isn't a library file on your data drive.  You said you store media there, not the whole iTunes library (iTunes folder - see all the links I provided earlier).  Your library file is in your user area Music folder on your Lion partition.  You either need to use it there with Snow, or it would be more clean to move it to the data drive and reconnect both your Lion and Snow Leopard iTunes to the library there.  You can use the preferences selection to re-unite it all inside one iTunes folder which works best for most people unless you are very comfortable with using iTunes with split folders (you would be answering questions here, not asking them ).