@turingtest2
Your suggestion of restoring the pre-update version of the .itl worked for restoring my podcast structure in 11.1. This time I didn't allow syncing when podcasts opened and asked. Now I'm curious to know what was different between the two files before and after the update.
However, I still have an iTunes horrible lag and freeze issue in List View that also appeared with the update. I'm still thinking that is part of the sync function, because if I disable my network iTunes springs to life.
EDIT:
Just now while writing this post I just got a thought and decided to uncheck the View Option (cmd J) "Show Artwork" option for Podcasts in List view. VOILA, iTunes completely sprang to life!
After iTunes 11.1 re-added List view, I ran around iTunes and checked the "show artwork" option for all views I could in iTunes. I have a very large library with thousands of custom album art, so I like to see my album art in List view. However, the problem for me was in the Podcasts List view with showing artwork. Turning only that one off, fixed my lag and freeze issue. All other areas of iTunes that have this option doesn't affect iTunes speed at all (i.e. Movies, TV Shows, Music (Song View), ONLY Podcasts List view with Show Artwork option set froze up iTunes.
Now I'm going to try and turning sync back on to see if I lag again or not. I'm crossing my fingers and hope it was only an album art malfunction in Podcasts that was fouling it all up. I'll report what happens after I turn sync back on.