Currently Being ModeratedDec 31, 2012 3:09 PM (in response to enfieldco)
iTunes has two modes of operation, depending on your setting in the Advanced tab of Preferences. It can either link to files located all over your hard drives, without moving them anywhere. Or it can create a folder called iTunes Music and move all your files into that folder, within which it will create sub folders based on the album name, or use "Unknown Album" if it doesn't know what album they belong to.
If you MOVE the files into other locations, iTunes will place an exclamation mark for that item in the library. The coders at Apple are still stuck in the 1980s and have not programmed the ability of iTunes to track user actions on files via Finder. This is something that IBM's OS/2 had back in the 90s, the entire OS was aware of user's actions in terms of moving, renaming, etc. Apple is stuck in the past... So if you move files manually, you'll have to re-add them to the Library and remove the borken linksy ourself. Pathetic, right?
If you want to "organize" your library into any sort of coherent structure, do NOT move the files from Finder, do NOT make new folders using Finder and then move the files into it. Instead use iTunes ability to create Playlists or Smart Playlists. So you can create a Playlist called "New Year DJ List" and then you can add songs to this playlist. To add a song, either click on it and drag it into the playlist. Or, right-click on a song, and from the pop-up menu that appears, select "Add To" and a list of your playlists will appear, and just click on the playlist you want to add it to. Really simple! The files themselves will NOT move their locations on your hard drive. Instead iTunes will simply make links to them within it's internal database (in it's XML file). Now, if you want these songs to use in other applications, go to that playlist, press Command-A (or go to Edit, Select All), and only the files in that playlist will be highlighted. Then simply drag to your desktop, or a folder on your desktop, and iTunes will copy the files (only the tunes from that playlist) into your location!!! Simple?
iTunes is the best we have on the Mac OS X side for organizing media. It is a pathetic piece of software with a TON of bugs, even in '11, and is truly a crippled product, in terms of what is truly possible with today's technology. However, that is what Apple wants to offer it's loyal customers, and so it's what we have to put up with, unless we learn the tricky art of coding.
Best of luck, in this crippled Mac environment, and happy new year!