I know that iTunes has pretty strict requirements about the address of the cardholder being in the same country as the country of the store you're trying to use...I'm guessing that since an American Express "gift card" doesn't actually have your billing address associated with it, you might have problems using it.
The $1 taken from your account sounds like a pre-authorization charge (basically something to make sure your card is OK). For normal credit cards, a pre-auth charge like this is returned to your card by the credit card company within a day or two.
I think you might have better luck using your card to go to Target or 7-11 to buy an iTunes card from there...
Best of luck!
1.67 GHz G4 PowerBook Mac OS X (10.4.4)