I don’t know how the agreement is worded (I’m sure it’s more complicated than “don’t get in the music business”), but Apple might be claiming that they are not actually in the business of producing music–they just distribute it. Would anyone really say that Wal-Mart is in the music business? After all, they sell quite a bit of it–probably more than Apple.
Of course, that argument could also be crap–I don’t know, since I’m not sure what the actual agreement was.
It’s not that simple. IANAL and I haven’t read the 1991 agreement, but sites such as this one suggest that the agreement doesn’t allow Apple Computer to sell physical media, such as CDs so that selling songs digitally via iTunes might be permissable. But I think Apple Records would have a problem if Apple Computer signed new groups as suggested in the OP.