To answer your questions:
Originally Posted by Rustinferth
1.) There are musical bands active on several servers. Being based on Laurelin, I'm most familiar with the ones there (The Shades, The Chosen Few, The Songburrow Strollers, Andunie....to name but a few) but then Landroval is the home to The Lonely Mountain Band, who organise the annual, multi-band, in-game festival known as 'Weatherstock', which is coming up on 20 July (check out the PLAYER EVENTS section for news about that). That would probably be the best place for you to see quite a few of the various in-game bands. The bands featured this year come from the Landroval, Laurelin, Brandywine, Vanyar, Crickhollow, Belegaer, Dwarrowdelf and Silverlode servers, but there are bands on most servers.
2.) As far as playing music goes, people are pretty reasonable regarding the type of music so long as the performer uses their common sense, respects the other players and doesn't do the usual rude things (e.g. playing your music right next to where someone else is already playing, playing real world music in the middle of a roleplaying group without asking them, etc). I could say that music that complement the atmosphere of the game are you safest bet, but then that is down to the interpretation of the individual player. I've seen people who like to play LOTRO to a soundtrack of Slipknot (which, personally, makes me want to stab myself in both ears) but to each their own. My advice is just to be sympathetic to the lore of the game and the sort of music that could be expected within the world of Middle Earth and you should be ok.
....Oh....and as for Stairway to Heaven...? Well , if you've seen Wayne's World, you know what the rule is regarding that tune (on ANY server)
Musician, Orator and Composer in The Shades