setting up shared drive

I want to attach an external mirror drive to my G5 iMAC to use as a time machine back up and shared drive. I have my computers networked as shared over an airport extreme. So here are my questions.

When setting up the shared drive on my other macs I have to input the computer name and password. Does this prevent anyone else from accessing the computers and drives?

What Apple format do I use to format the drives? Journaled, GUID, etc.

Can I or will I be able to use the external drives as iTunes media central file? Meaning can I stream a movie to one mac and listen to iTunes on another?

Is there a better or more simpler way to do this? I do not know anything about NAS? or how else to accomplish this with what I currently know.

Thanks.