Ok...here's a workaround for Windows based computers. Not an ideal solution but it works. For those of you on a corporate network, I highly suggest you get this approved before you implement it.
You will need to download and install Cntlm Authentication Proxy. The link is...
http://sourceforge.net/projects/cntlm/files/
Once installed...find the cntlm.ini file located in the c:\Program Files or c:\Program Files(x86) folder and open it with notepad. Modify the following lines to match your network/proxy configuration...
Username
Domain
Password
Proxy
Once you save the cntlm.ini file go to Services and start the Cntlm Authentication Proxy service...or you could simply restart the computer.
The last step is to configure your browser to use the following address as a proxy server...
127.0.0.1 port 3128 (3128 is the default listening port used by cntlm and can be changed in the cntlm.ini file)
As I said, this is not an ideal solution as your network username and password are stored in the cntlm.ini file as clear text and if you ever change your network password you will need to change the cntlm.ini file as well. This is also why I suggest that those of you on corporate networks get approval for this before you install since this is a potential security risk. But this does resolve the proxy authentication pop up issue with iTunes and for anyone attempting to use Dropbox and having similar proxy issues this solution works for Dropbox as well.