As to what folders iTunes creates here is a representative graphic.
The main disctinction between iTunes 8 & 9 is that in 8 folders like Audiobooks, Movies & Podcasts were scattered in amongst those for different artists. By moving all the music into a Music subfolder the top level *iTunes Media* folder is now neatly divided into different classes of media.
When you install iTunes it
should have asked about associating files and making iTunes your default player. In your shoes I would have said no until I'd had a chance to explore the program.
On initial install iTunes will also create a default library and offer to import your existing media into it. It
may also ask for your *Keep iTunes Media folder organised* & *Copy to iTunes Media folder when adding to library* preferences at this point, but I can't honestly recall. Again, declining to import your entire library at this point would have allowed you to explore the software first.
With
Keep... and
Copy... turned on iTunes will attempt to root through the computer making copies of existing media in .mp3, .wav or other iTunes compatible formats and offer to convert anything in .wma.
As mentioned elsewhere in this thread you don't have to use the iTunes layout, you can put your files anywhere you like. Anything that iTunes downloads, transcodes or rips will, however, end up in this layout. Also your library will be much easier to maintain if all iTunes content is inside the iTunes Media folder whether you let iTunes keep it organised or, like me, decide to do things your own way. This requires extra effort since having ripped a new album I then have to "correct" it for my presonal style, rename & move the tracks, delete from iTunes & reimport.
tt2