Hi
In respect to your problem this may help it's worth a try it sounds like you have some sort of corruption.
Use time machine first but remember Itunes has files all over the place so you need to restore all the files not just itunes application.
I realise this may sound complicated but I am trying to assist
The "user" preferences are in the home folder( your user name)/library /Itunes
also preferences in home folder( your user name)/library /preferences/com.apple.itunes.eq.plist
I would also rebuild permissions as AGAIN that also could be the problem ie corrupt permissions
1) open disk utility in Applications /utility folder
2) Select your hard drive then select repair disk permissions Some times corrupt permissions can cause problems with some applications including updating
3 Restart then try updating itunes again by selecting software update in Apple menu
An alternative is down load itunes 9.1 from
Apple - iTunes - Download iTunes Now
4) If non of the above works fry plan B
.Try creating a new user "admin" giving full privlages then try the update from apple it's possible the iTunes in your user home is corrupt if it works then yu know where the problem lies. This is handle as it isolates the user
If that works you know the problem is in your user area
Failing that if nothing else works install a clean system from DVD option 3 in option menu this does not erase the hard drive ok. It preserves the preferences and data but make sure you select the correct one
In general OSX is bullet proof its usually a corruption of some type that has caused it mainly user file problem.
If non of above does the trick or you choose not to do any thing at this time please wait until wednesday your time and I will have my support technician try to assist you. We are 18 hours later than you and he will be back from vacation then. If its any help I have been doing Apple support since 1984 and given a chance can fix the problem
Colin , Brisbane Australia
Independent Apple support specialist
PS let me know how you go and NO we will not charge our normal $150 per hour support fee LOL
Australia has to wait until late April for the release of the iPAD