It looks as though something is blocking iTunes, preventing it from closing.
In the past, bonjour as been responsible for this although I haven't seen it recently. You could try stopping the bonjour service to see if that allows iTunes to close.
Otherwise on general principles, Do you have any plugins or widgets that use iTunes. If you run diagnostics from the iTunes help menu it should list any plug ins. iTunes has a safe mode that allows you to start without plug ins. Hold down ctrl and shift while starting iTunes.
If you disconnect from the internet, you can see if disabling your firewall and virus checking fixes it - that would suggest a configuration issue in your security software.
Then you could try a selective start up using MSConfig to see if you can identify any conflicts:
http://support.apple.com/kb/HT1275
As a temporary work around, have you try closing iTunes.exe in the task manager to allow you to restart iTunes without rebooting. I guess this could result in the library not being saved, but I am not sure.
PS I should have added- have you installed any new software or made any other changes to your system between when iTunes last worked properly and when the problem started.
Message was edited by: polydorus