Okay, I've taken all the steps above and authorized the computer on both accounts for her iTunes Purchaes and mine. However, I added a song through iTunes on my side and when I check iTunes on her account, the new song wasn't there. Am I missing a step?
To add to Le Big Mac, remember that there are two parts to iTunes:
1 - the folders that have all of the music in them
2 - the folder that has all of the iTunes config files in them
It sounds like you've setup your (and her) iTunes to use the shared folders with music in them, but it still sounds like you guys are each using your own individual folders with the iTunes config data.
When you add a new song to iTunes, in addition to copying the song out the disk, it updates the iTunes config stuff with info about that song. That's probably why your iTunes is aware of the new song, but hers isn't.
I'm not sure of the best way to take it from where you're at it, but here's my recommendation. Someone else may come along with a better one.
Look in your Music folder and copy the iTunes folder to a new location where both you and she get get to it.
Close your iTunes, then hold down the OPTION button and re-open it. It should ask you to Create a Library or Chose a Library. Click "Chose a Library" and point it to the location of where you just copied the iTunes folder to.
Do the "Chose a Library" on her iTunes, so it points to the same place yours does. Then regardless of who adds a song, since you both are using the same config files, it should show up for both of you.
Hopefully that gets you going.
