Ideally you want all the songs inside <User's Music>\iTunes\iTunes Media. iTunes is indexing the files in that location so they are both known to iTunes and also on your computer available to any other media player. If you have original copies of files outside the media folder, and not connected to iTunes, then you could delete those, otherwise if space is becoming an issue you could consider moving the entire iTunes library to a new drive.
I've interpreted your post in a slightly different way to tt2.
When you say i tunes (sic), do you mean your iTunes Library (the computer programme) or your iPod? I'll assume for now that you mean the programme that lists your songs (your iTunes Library).
iTunes is simply a list of the songs, like a database. The songs are not actually in iTunes. The song is where you put it and iTunes simply keeps a list telling itself where you put it. So you are not using up twice as much space, unless you have duplicates of the songs in two different locations, as mentioned by tt2.
You can check where any song is by highlighting it in iTunes and selecting File/Get Info/Summary>Where: which indicates where the song that iTunes has listed is located. So if the same song appears somewhere else on your computer, then that is the duplicate.
You must keep the song that iTunes has listed. If you delete that one, you lose the song and iTunes (which will no longer be able to find the song) will mark it in the Library with an exclamation point. These discussions are littered with people who have deleted the actual songs and now their iTunes is full of exclamation points.
! ! ! ! ! (just like those!)