I'm going to be building a computer and setting it up as a media center for the guys I live with. The things I would like it to do are show up in iTunes as a shared library, and probably be able to stream videos and things from its harddrive to things like boxee but also game consoles if possible. Is there a specific software package that will let me do that or Is it going to be a little more difficult that that?
This really depends on your familiarity with linux. If you are running this computer purely as a server then I would reccomend either Ubuntu Server or Arch Linux as far as the distribution goes. If you are planning on running a GUI then you may want to go with Ubuntu or, if you are comfortable with linux, Arch.
As far as streaming music to iTunes, I have read good things about Netatalk for hosting files on a mac network. If you are on a windows network, however, then you will need to set up a Samba server on your new computer.
I am going to venture a guess and say that you and your roommates are probably all running windows. In that case here are the tutorials you will need for setting up Samba:
To my knowledge there isn't a distribution that comes with Samba or Netatalk but they are both fairly simple to set up on most distributions. If you are looking for something simple to get you up and running with this server, go with Ubuntu. If you are looking for customization and strong documentation, go with Arch.
Hope this helps.
Setting up a file or media server will generally be very similar across Linux distributions so you should choose whatever distro you are most comfortable with. Some good server-oriented distros are
CentOS - According to distrowatch, the most popular Linux distro for servers these days, probably due to it being just a free clone of Red Hat Enterpise Linux. This would be a good choice if you've ever used Fedora.
Ubuntu Server - Becoming more popular nowadays owing to the success of Ubuntu Desktop. If you've used Ubuntu Desktop before, this will probably be a good choice.
Debian - Very similar to Ubuntu since Ubuntu is based on Debian. It has a reputation for being very stable. If you're used to Ubuntu, this could also be a good choice for you.
ArchLinux - A minimalist, cutting-edge, rolling-release distribution. It is designed primarily for experienced Unix/Linux users. However, it has excellent documentation. I often find myself using Arch documentation for setting up stuff on other distros.
I second Chris's suggestion of using SAMBA. I would also like to add that, if you want music or video streaming, a lightweight HTTP Server may be a good idea. Nginx and Cherokee are both very good choices for serving up static files.