using g3 as media player with itunes

Which G3's are they, the Beige or the B&W, or are you talking about laptops, or iMacs?
See here: http://www.lowendmac.com/ppc/index.shtml
or here: http://www.lowendmac.com/imacs/index.shtml
or here: http://www.lowendmac.com/pb2/index.shtml

You're saying the CD drive will not recognize a CD that has an iTunes installer on it? Is it a burned CD-R disk? Or perhaps, it's a CD drive and a DVD disk?

Which Mac OS are you using? OS9? OSX?

Why are you unable to connect to the internet?

There are two different types of iMac G3's. Do you have to push a button to make the CD drive tray pop out? If so, that's called a tray loading iMac--the first version of the iMac. If it's just a slot in the front that you insert the disk into, that's called a slot loader--the second, newer version. The most important thing to find out is which version you have and how much RAM you have. When it boots up, click on the apple in the upper left corner and click on "about this Mac." It will tell you the basics. If it's also in the drop down menu under the apple, "Apple System Profiler" will give you more information.

I wouldn't worry about iTunes at this point. The version of iTunes you have on that burned CD probably won't work with the OS installed on your machines. You'll need to get an older version, or much better yet, get a newer Mac OS on your hard drive--but that would depend on how much RAM you have. One other thing for iTunes, of course, is how big is the hard drive? Click on the hard drive icon once to highlight it, go to the File drop down menu at the top and click on "Get Info" and it will tell you the capacity of the hard drive.

To add to the good advice of HC above, you should also know that tray loaders tend to be pretty finicky about burned media. They are of the age where they just don't read certain types or brands of recordable discs well or at all. The best discs to use seem to be the "Music CD-Rs" that would be compatible with older CD players that would also be finicky like the tray loader drives.

Also, if your iMac doesn't have the most recent firmware update installed DO NOT BOOT AN OS X CD ON IT! Doing so my render the video blank or barely visible until the firmware update gets installed, which can be a tricky process with no display...

the iTunes Mac OS 8.6 patch, which will unlock the installer
and the iTunes application, so that they will run on Mac OS 8.6 (Mac
OS 8.0/8.1 and 8.5/8.5.1 use a different interface library which is not
compatible with iTunes.)

iTunes MacOS 8 Patch 1.1.3 for iTunes 1.1
http://www.macupdate.com/info.php/id/5401