I just did this very thing. I have all my music and pictures on another drive. It works fine but I was surprised to see a message when I added the folders to the library. It said something like:
"do you want the folder to be shared? You can still add to the library and not have it shared.....yada yada"
Every time I do ANYTHING with sharing, I mess it up, so I quit until I gain more knowledge. Why would it ask me if I want to share something that's hooked to the same motherboard? Unless it has to do with the "homegroup"
I did like the Vista feature "show me all files I am sharing" I cannot seem to find the same thing in Win7