I won $2564.50 at a casino and am filling out a 1040 form and have placed it on line 21. On which line do I put the tax withheld on? I will also file a W7 form with endorsement verified passport. Also where do I put the amount I have lost to get this winning?

Your taxes that were withheld from your winnings will be reported on Line 61 on your 1040 federal Income Tax withheld.

Also you can only claim losses up to the amount of your winnings. This would go on Schedule A.

This site will help:
How to Report Gambling Winnings and Losses for Tax | eHow.com

As you are applying for an ITIN, it seems that you arae a non-resident alien with gambling winnings, right?
You would use a form 1040NR not 1040 in that case.
The winnings would then go on schedule NEC, no losses allowed and the taxes paid on line 60d (that's for the 2010 1040NR)