Moving files manually generally confuses iTunes. Starting over afresh will remove all existing ratings, playcounts, playlists etc but if that isn't an issue then why not? Scratch that... With an iOS device you may find that it will see a new library as a stranger and immediately suggest wiping the device and reloading... See what happens if you connect the device to the empty library made in the next step before you add in the media. If you get that warning then you may want to copy in your old library file and delete all the entries from it, then start over. I'm a bit hazy on this one as I haven't tested it fully. Generally a fresh library on a new machine gets a different ID from a previous one, however multiple libraries created on the same machine might not be an issue.
I'd suggest you create a new library in the root of the drive in a folder called iTunes. Click the icon to launch iTunes and hold down shift. Keep holding until asked to create or choose a library, click create then browse to the root of the external drive and let iTunes create a library called iTunes.
Move all your media inside the folder iTunes\iTunes then use the menu item File > Add Folder to Library to add the folder to the library.
Once the files are all inside the library you can use my DeDuper script to clean up the duplicates. See this thread for background.
See also my article Grouping tracks into albums.
tt2