Create a new user account on your system
(System Pref's/Accounts/and click on the + button)
Log into the new account and try to use itunes and see if the system reads disks. If it does then it a Plist issue and and should trash the files what Gigs recommends.
If the problem still on the system it will be a system wide issue and you it best to do:-
-Boot to install disk one and run DFA
( Hold C button and keep holding till u see apple screen when u hear the chime > select english as main lang > select utility > disk utility > select mac HD > Repair disk and disk permission
- Safe boot, this take a while to boot to but it may fix the issue
( Shift button on chime and hold until apple screen appers)
- Boot to singel user mode and ran fsck -fy
( Apple + S on chime keep holding till apple. Type fsck -fy and press enter. the system will ran a dionstic and at the end it will say " Mac appears to be ok"
then type mac-boot or reboot to exit.
If say's the that "mac HD has been modified and type fsck -fy again untill it does say "Mac HD appears ok")
i hope this helps