I've been using iTunes to stream music over the LAN, and quite frankly the quality is terrible. On the other hand, its ease of use - having a simple client on either end, and it just 'working' with full control on my end is nice. The quality however is terrible - I'm wondering if there's any controllable streaming remote music serve for Windows that will let me pick the bit rate it streams the music at, or uses whatever bit rate the original file is in, and streams it. It has to be controllable at the client end, and will work acceptably over a WLAN connection.
You may want to give VLC a try. I've only ever used it as a player (which it's great at), but it was initially designed to be a media streaming server. It sounds like it should fit your needs pretty well. Plus, it's cross-platform! VLC can stream from a video file on the hard disk, a DVD or CD, a digital TV card, or other video input devices.
You might be interested in Ampache. It's a web-based music streamer designed for a LAMP stack (Linux, Apache, MySQL, PHP) but can be installed on Windows with XAMPP. It can be configured to stream files as-is or transcode them to some other format or bitrate. I believe it can also be used as a web-based remote for controlling a Shoutcast server (for adding playlists, etc).