Thanks for this fix suggestion. It sort of worked except that I got the error that some music could not be imported. Of course, I'll never know which ones they were. And fortunately, I've never created Smart Playlist that seem to be an issue with this reimport technique. What's important to note, and I can say that I didn't read every entry in this thread, is that the "iTunes Library" file was deleted by the OS during this terrible happening. It's not in the trash, and spotlight can't find it. This, sadly, has happened to me once before.
Like everyone else, I find this issue not just a bug, but a catastrophic failure by Apple to find a way to preserve one of their customer's most valued possessions in the world of Apple, an iTunes Library. It's true, think about it. If not for iTunes and it's combination of the iPod as a music player, Apple would not have seen the success it has in the last half decade. Sure OS X is a great OS and the Apple computers are a beautifully powerful machine, but it's the iPod and iTunes that have taken Apple to a new level of success. To fail its customers like this, is folly and I can honestly say that I hope it costs them. I love Apple but like with every expanding empire, the masses often get sacrificed at the price of higher stock value. I feel like a proud faithful soldier of who has suddenly realized the ugly truth of a senseless war. I hope that future editions of iTunes support a failsafe back-up system. In the meantime, anyone know of some shareware that will help keep iTunes solid?