Your first statement is not correct. You can drag a picture (.jpg, .png, .tiff and probably other formats) from anywhere on your computer into an iMovie event or directly into a timeline using the Finder.
The iTunes library is accessible for most people (including myself) at the bottom of the Libraries pane:
Clicking on iTunes should bring up a window with all your music. Do you see these item sin the content library?
If so what happens when you click on iTunes?