Just choose "Add Folder to Share" form the LW Library Pane File Menu, and choose your ~Music folder (or a subfolder). This will take quite a while to hash the first time, and you will want to make sure you are only sharing files that you choose to share.

It's worth a look inside the ~Music folder to see how iTunes organizes the files. You should also look for posts by rkapsi--he's the iTunes/LW expert, and will have much better ideas.