First, if you haven't already I greatly encourage you to check out Guitar Fundamentals 2 which starts with a lot of basic theory.

http://www.guitartricks.com/course.php?input=2

Originally Posted by: flipside05us
What I want to know is when for example a song is in the key of say C, does that mean I can just use the notes in the C major scale to jam along and it will go with the song?
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That is the general idea. To be more specific, you target the chords in a progression as they happen, using the notes of a scale. I cover this idea in these tutorials on improvisation.

http://www.guitartricks.com/tutorial.php?input=876
http://www.guitartricks.com/tutorial.php?input=483
http://www.guitartricks.com/tutorial.php?input=491
[QUOTE=flipside05us]
Also how do I find what key is a song in, someone I think mentioned that the first note of the song is the key it is in, the first note being the first sound you here or the first word sung?

That is also covered in the above tutorials. The first note or chord of a song is not necessarily the root note or home key. However, quite often the last one is! :)

There is more on music theory & keys here.

http://www.guitartricks.com/tutorial.php?input=495
http://www.guitartricks.com/tutorial.php?input=835

Ask more if necessary, have fun!

Thanks, Seb for your in depth reply! :)