I am planning on upgrading my macbook to a macbook air and I know that there will not be enough room in the macbook air to store my itunes library so I will be purchasing a portable hard drive too. How easy is it to transfer my library and can I keep iTunes on the new air and have the songs automatically transferred to the hard drive?
iTunes: How to move [or copy] your music [library] to a new computer [or another drive] - http://support.apple.com/kb/HT4527 - a somewhat bewildering and not always easily understandable set of options.
Quick answer if you use iTunes' default preferences settings: Copy the entire iTunes folder (and in doing so all its subfolders and files) intact to the other drive. Open iTunes and immediately hold down the Option (alt) key (shift on Windows), then guide it to the new location of the library.itl file in the moved iTunes folder.