Ok, so is it possible to stream my iTunes purchases from my Windows PC, to an Apple TV or do I have to purchase them on the Apple TV? thanks for the help
Anything that works in iTunes will work on the AppleTV. Whichever computer you set it up with becomes the main source, and as far as I know, the music from that machine must be transferred/synced to the AppleTV in order to play, but movies can be streamed. You can also connect other computers to the AppleTV, up to 5 I believe, which you can use to stream music/movies to the AppleTV.
No, music can be streamed too, and the TV can also act as remote speakers for itunes on your computer.
I know it can be streamed from computers, but I just never had any luck streaming the source Mac's music. I could only get it to play that music if it was synced. I could very well be wrong though.