Can time machine keep a backup of iTunes and iPhoto libraries if stored on an external hard drive

Not that I know of. TM is for backing up the internal drive of Mac computers. You could always just copy those libraries to another external.

Yes. Remove the external drive from the exclusion list in the Time Machine preference pane.

Sure. No problem at all. Shootist007 is wrong. I do it all the time on my iMac.

Stanley, please do tell us how to time machine back up a aperture library on external drive.

All you have to do, as Linc pointed out, is to Remove the external drive from the Excluded list.