To go back to your original question, the best way to have two separate iTunes libraries on one PC is to have different Windows user accounts for yourself and your wife. In this case, you'll have your library here:
- C:\Users\user1\Music\iTunes
and your wife's here:
- C:\Users\user2\Music\iTunes
substituting the appropriate user names for "user1" and "user2". The only issue here is that iTunes is fundamentally a single-user application so it can only be accessing one user's library at a time - in practical terms, this means either disabling fast user switching in Windows or be disciplined about making sure that you exit iTunes when you stop using it. There are other approaches possible, in that you can configure iTunes so that two users can share the same library, or that each can have a different library but share some or all of the same media files. To be honest, although these can be made to work they're both in the "one way to get it right, many ways to get it wrong" category - I would not recommend either approach.
You asked "In iTunes, which is the "main" area--iTunes itself or the iTunes library on my PC?". There are two things involved here, the iTunes application (a collection of software executables, configuration data, and preference files that iTunes uses when it runs), and the iTunes library (your collection of media files/folders plus the iTunes database that keeps track of all your media - think of it as the "catalog" - as well as the definition of your playlists, your ratings, play counts, etc.). This is the "main area" (and should be the only area) for storage and organization of your library.
By default, this is all contained within the iTunes folder in your Windows Music library, as described above, and the standard structure of this library (or each library, if you have more than one) looks like this:

Lastly, in the context of iTunes "sync" operations refer to one of the methods by which the content of your library, or a specified subset of it, can be transferred to / maintained on an iPod, iPhone or iDevice. tt2's response above refers to his user tip on Backup your iTunes for Windows library with SyncToy which describes the use of the Microsoft SyncToy utility to create and maintain a backup of your library files/ folders; "sync" here has a different meaning to that within iTunes in that it refers to the process by which two sets of files/folders (in this case your iTunes library and a replica of that library stored on another device) are synchronized.