Old Europe: They meant she was listening to Western (Capitalist/Democracy) music from the free side of the Iron Curtain. The incident they refer to is when she was in school in East Germany. I guess during the Cold War people there and in other Soviet Bloc countries weren't supposed to like American, French, etc. music.
Ah, I see. Well, practically everyone did, provided you knew where to get it from. My parents listened to "western music" too during that time. My parents also wore jeans. Does this qualify them to hold the office of Chancellor too?
Btw, Schröder just lost the vote of confidence in the Bundestag as it was planned. Now it´s up to President Köhler to dissolve the parliament and call for early elections. If he does so then the issue will go to the Constitutional Court first, because some MPs are planning to file suit against the way early elections were made possible (by "faking" a defeat in the vote of confidence).