Yes you can store your music and pictures on an external HD. It's not a wise idea though to have the same drive do double duty for a TM drive though. You should have 2 separate external drives, one for TM and the other for storing data. Drives are cheap and the risks are pretty high if you store TM and other data on the same drive, if that drive fails you have lost everything! If you are using iTunes and iPhoto once you move the information over to the external drive you need to tell both programs where the information is now stored. How you would do that is in iTunes, Preferences, Advanced and then input the location. For iPhoto you can use this Apple article:
http://support.apple.com/kb/HT1229
Regards,
Roger