Yes it can - I have ALL my iTunes library on my WD MyCloud which can then be accessed by multiple devices.
1)Using Windows Explorer COPY the iTunes folder on your PC hard Drive to the Server/Public/Shared Music folder leaving the original on your PC as a backup for the moment.
On your PC hold down the ‘Shift’ key when double clicking the iTunes icon. This will open up a window ‘Choose iTunes Library’ rather than start iTunes.
Select ‘Choose Library’
Navigate to Server/Public/Shared Music/itunes/iTunes Library.itl and select. - done.
The next time you open iTunes on your PC the index will be the one on your server.
Multiple PC’s on your network running iTunes can be re-directed to your server in this manner. Any PC can add / remove alter the directory index also. - ideal for sharing an iTunes library accross multiple users and with remote access too.
If you are satisfied with the above you can erase your original iTunes folder on your PC, keep it as a backup, or if not you can always re-direct your iTunes index back to the PC (2 above)
I hope this helps.