Getting iTunes & Windows Media Player to play nicely
(the short version)
If you want WMP & iTunes to live in harmony then disable WMP's options for updating or reorganising media, then tell it that its Rip Folder is the same as your iTunes Media\Music folder. Move anything you want to add into iTunes either into the Automatically add to iTunes folder, assuming you are happy letting iTunes organise things, otherwise place them where you want, but inside the iTunes Media folder. If you are letting iTunes Keep the iTunes Media folder organised then WMP will work out when iTunes has moved something, but the reverse is not the case. WMP will also detect and add compatible (non-AAC) files that have been ripped or downloaded using iTunes, unless you tell it not to of course. If you want to add compatible (non-WMA) files created by WMP into iTunes use iTunes Folder Watch. You should probably settle on .mp3 as your default media format so that the same audio files can be used in either player without unnecessary duplication of files. Choose a bit rate that gives you good enough quality, probably 256k or above. N.b. Most video formats will only work in one of the two media players.
More on letting iTunes & Windows Media Player live happily together
(longer version, with pics.)
Using Edit > Preferences > Advanced take a note of the location of your iTunes Media folder, here for example I have my library living at the root of my H: drive. I choose to organise my files manually but generally recommend setting the Keep iTunes Media folder organised option to others as it requires less housekeeping. Having Copy files to iTunes Media folder when adding to library set often encourages unnecessary duplication but the choice is yours. If letting iTunes manage files then move your imports into the Automatically add to iTunes folder, otherwise arrange them to your taste within the iTunes Media folder before manually adding them to the library.
On the Preferences > General tab set your import settings to mp3 with a sample rate to suit your taste and the capacity of your devices.
In Windows Media Player use Library > More Options > Rip Music to set WMP's rip folder to <iTunes Media Folder>\Music. Set the format to mp3 and choose your quality settings. Disable the Rip when CD inserted option so you can choose whether to rip with WMP or iTunes.
On the Library tab make sure the highlighted check boxes are not ticked. This prevents WMP from automatically updating files and moving them about which can confuse iTunes. With both programs sharing the same media folders you should also take care when deleting tracks from one library that you don't accidentally delete the files if they should be left for the alternate library.
WMP is able to detect when media has been moved from one location to another (providing it is monitoring the target folder) so you can move any music that is currently organised in your main <User's Music> folder into your iTunes\iTunes Media\Music folder and WMP will reconnect to it. You can then add those folders that you want to into iTunes without creating duplicates. Of course you may have already duplicated some material so you'll need to consider this before deciding what to move around and what to delete. See also my DeDuper script for removing duplicates and this thread for more background on it, including tips on how to dedupe manually.
Existing WMA or AAC files in each library can be set out in the same folder structure accessible only to the WMP or iTunes libraries respectively or you can opt to convert them to a common format when the need arises.
Now you've taken all that effort to make your library perfect don't forget to back it up. See this user tip for suggestions.
tt2