This answer is meant to add more information in addition to the one above. Also, I have not seen the original comment thread, and apologize in advance if I have given redundant information.
Fields that look at music and the brain
Researchers in many fields have an interest in understand how music is processed by the brain and more particularly how emotion ties in. These can include:
Different fields may focus on different aspects and may use different methods and techniques, but can also have overlaps. Wikipedia has a brief article on music cognition as an umbrella term/field.
Areas involved with music performance and perception
The actual focus of music cognition research can be further divided (as you have in your question), into research on music performance, music perception, or interactions with each other and other modalities, to name a few.To answer your first question, music performance will inherently rely on basic motor networks and often looks at the brains of musicians compared to amateurs or non-musicians. Music perception relies on auditory circuits at a lower level. As language cognition also involves the auditory system, studies often look what/where the differences occur. You can typically find chapters about the motor or auditory system in textbooks. In addition, there are other higher level processes and their associated areas that may be involved (planning, memory, classification, recognition etc.). If you are further interested, here is one review on a few recent developments in music performance (Thompson et al., 2006)[pdf]. Here is another that covers recent work on the perceptual side (Koelsch & Siebel, 2005).
Music and Emotion
To add to the above answer and provide you with more references, Chapter 5 of (Hunter & Schellenberg, 2010) provides an overview of the studies that show how music elicits emotional responses. Interestingly, there is evidence that the emotional response to music is separate pathway than non-emotional judgement of music. This was seen in a patient, who after brain damage had significant impairments in non-emotional music tasks (recognizing melodies, sing more than one pitch, etc.) but intact emotional processing of music (Peretz et al., 1997).