Thank you Limnos for your reply.
As you can see, I added the .itl and I could open Niki's Library. That's good.
Before, I could just select the whole folder and not have to go in and select the .itl. No that this is a big deal but I am wondering why this has changed. I still get the iTunes Library could not be found in this folder", when in fact, it is in there.
I closed iTunes, opened holding the option key and selected the whole folder iTunes Mike's Library and that opened just fine. Any idea why this is?
Any of this have to do with my External phantom drive? Or the fact that the problem's with Niki's Library started as soon as I created Mikes Library?
My immediate thought is if it has to do with the naming of the files. I haven't tested this but I wonder if you kept the name of the actual library file the default name instead of adding "Niki" if it would then work just selecting the folder. In other words, if iTunes has instructions if you select a folder to then check for a specific file inside that folder, and by your renmaing the file it no longer sees exactly "iTunes Library.itl" and doesn't know to search about inside that folder for a library file with any other name.
Somewhere in my references (not sure where) I recall something about library file naming conventions. I'm not sure if they are in:
What are the iTunes library files? - http://support.apple.com/kb/HT1660
More on iTunes library files and what they do - http://en.wikipedia.org/wiki/ITunes#Media_management
iTunes 9: Understanding iTunes Media Organization - http://support.apple.com/kb/ht3847
Image of iTunes folder structure Dec. 2011 - https://discussions.apple.com/message/16923545
Image of folder structure and explanation of different iTunes versions (turingtest2 post) - https://discussions.apple.com/message/13025536
What are all those iTunes files? - http://www.macworld.com/article/139974/2009/04/itunes_files.html
Your immediate thoughts were right on the money. It was a naming issue times two.
It would work if I selected the iTunes Library Niki.itl. Today, by your suggestion, I renamed the Library as iTunes Library.itl and it opens perfectly. I can now Option open iTunes and select only the Folder and it works.
Thank you for the help!