How to optimise iTunes music library for M1 iMac

I have always keep my music on my MacBook Air, but it is getting old and I decided to move everything to my M1 iMac. I have over 5,000 songs, mostly purchased from iTunes store. I copied everything to a flash drive and moved it onto the iMac. Now I am having some issues with songs being authorized or even available.

When I look in the iTunes folder I see some confusion. There is iTunes Music with a bunch of folders with music in that, but I have an iTunes Library.itl and what looks like an iTunes Music Library.xml.

When I look in the Music folder I see Music Library and Previous Libraries.

I am not sure what is legit or not and if I have some things in the wrong place. See the two screen shots below.

This seems way more confusing than it should be.

[Re-Titled by Moderator]