iTunes 7.7 has made changes that has made it incompatible with any version of LW. It will still import the songs, but the shared library will no longer work in iTunes. If you look around the mac sections you will notice this has already been discussed.

Answer is either downgrade your iTunes to an earlier version, else, after adding your songs to iTunes to create a playlist that is shared on your network. You could for example share your Recently Added playlist. Check your iTunes preferences -> Sharing for which playlists to share.

iTunes does still auto-import the LW songs to its Music Library if you have LW set to do this.

I recommend iTunes Music Library set to Copy files to iTunes Music folder when adding songs (under Advanced option of iTunes Preferences.)