I have in my iTunes Media folder two music folders: ...iTunes Music and Music

• Normally the iTunes library will be found in a folder called iTunes placed in a folder called Music inside the user's home folder.
• The original name for the media folder was iTunes Music. New libraries created with iTunes 9 or later use iTunes Media.
• Artist folders originally went in the media folder. From iTunes 9 the default location is a Music folder inside the media folder.
• The original name of the iTunes database on a Mac was iTunes Library (no extension) but it is now called iTunes Library.itl.
• The XML file is an optional support file provided for third party applications so that they can find out what is in the library and where it is even if iTunes isn't running. If the library is in the standard location of <User's Music>/iTunes the XML is called iTunes Music Library.xml otherwise it has the same name as the library file but a different extension. See iTunes > Preferences > Advanced for the Share XML option.
• There may also be two .itdb files, normally iTunes Library Extras.itdb (for iTunes LPs and Extras) and iTunes Library Genius.itdb (for Genius) and a hidden file called sentinel.

You can throw away the XML, it will be recreated automatically if the option to create it is set. If you trash the .itl you lose the listings of your content, ratings, playlists, play counts, etc.

See Make a split library portable - Apple Community for detailed advice on rearranging the. library into a more conventional shape. The exact steps you need to take will depend on your starting position. From your description I think you may have:

~ {Home folder}

> Music

>> iTunes

>>> iTunes Media

>>>> iTunes Music

>>>> Music

But perhaps I haven't got the levels right.

tt2

Under iTunes > Preferences > Advanced check that the media folder is set to ~/Music/iTunes/iTunes Media where ~ is your home folder, which I assume will be the case, then turn off the option Keep iTunes media folder organized in the same dialog, click OK, then go back and turn Keep organized on again. iTunes should reorganize everything within iTunes Media into a more sensible layout.

tt2