I'm still using iTunes 7.2. But I read that - prior to installing iTunes - what you need to do is turn off Shapeshifter via the Application Enhancer pref pane. (This was advice for iTunes 7.3.) Then install iTunes, and then repair permissions and the like. After all of that, go back into the Application Enhancer pref pane and turn Shapeshifter back on. Everything should work.

I did try this on a different drive with iTunes 7.3, and it worked fine. I can't speak for 7.3.1. But it appeared to be a problem with the installer and not a conflict between iTunes and Shapeshifter per se.