Network setup iMac and Apple TV

This may be a pathetic question, but I am utterly lost with how to establish a wireless connection between my new Apple TV and my iMac. The more I read, the more confused I get. I have an iMac, a Westell Versalink 327W DSL modem/router, and an Apple TV (160GB). It was my understanding that the iMac has an Airport Extreme built-in? How can I establish a network that can connect my Apple TV to my iMac so that I can simply play music from iTunes on the Apple TV. I don't even care if the Apple TV has internet access right now. I currently do not have a wireless network established. Do I have to do this through the router? Again, I am totally lost and would be grateful for any help.

Does the iMac have an Airport Extreme built-in?

If the iMac has a built in Airport Extreme, can I use it as a base station?