I find this easier to do in the Storyboard mode, use the down arrow between each picture to select the transition you wish to use. There is an apply to all within that area.

In Time-line mode (the mode that shows you everything by tracks, you would drag & drop the desired transition on top of, but between the first and second images. From there I believe you will see a small box representing the transition that you can click to apply to all... but again, I find all that is easier in the Storyboard Mode.

To add music, you would need to be in Time-line mode. You can add as many audio files as you like, but remember, if you a small amount of photos your audio can be longer, you can shorten the audio, but then its not the entire song, but yes, you can add as much as you like... as long as it is a supported format, iTunes files are not supported due to a copyright protection.

To add in audio file, you will use the navigation section of the PhotoStory program, and navigate to the audio file, drag & drop it to the last track in the Time-line mode, you will want to line it up to the start photo of your project, or where you want the audio to start.