Imac too old???

I have an Apple Imac G3/600 with Leopard and wireless broadband.....I wonder with external HD it would serve as music server. I have latest Itunes on machine and was thinking of ripping cd's and then transfer to ipod. My question is whether the technology is now too old..can I use to transfer digital files to external drive & then ipod?? (Santa to deliver I think!) Also would download internet radio tracks as well. I also have HP laptop less than a year old with great processor speed and hard disk room but seems that vista is harder to use... I use Dared MP-5 tube amp/dac with itunes and this old imac and internet radio and assume it would be part of a music server system with an external HD but I'm not sure how to go about this...can someone simplify this for me??? thanks in advance
If you're running Leopard with no issues and all your doing is using iTunes and an external drive, you should be fine.

I was using an iMac G3/450 with an external 500 gig drive, running 10.4 and it worked fine. I have since upgraded to a Mac Mini.
you are running fine now. what i would do is get yourself a NAS disk setup and put all of your itunes stuff on that. get a NAS that has 3 or 4 disk drives in it so you can build a raid 5 setup to protect your library incase 1 disk fails. also, the NAS will allow you to share this array with all your computers on the network.