Hi.
If you have a folder located anywhere on your computer outside the designated media folder, and have the option "Copy file..." enabled then iTunes creates new copies of each file found in the source folder. If you add some more files to that source folder at a later date and add to the library again iTunes will add new duplicates of all files that were already there as well as adding the new files.
If you have a folder located anywhere on your computer outside the designated media folder, and have the option "Copy file..." disabled then iTunes creates links to each file found in the source folder. If you add some more files to that source folder at a later date and add to the library again iTunes will recognize the files that it already knows about and only add the links to the new files.
If you have a folder located anywhere inside the designated media folder then the add folder command will cause iTunes to create links to any tracks it doesn't already know about.
When adding files from CD check that you haven't previously added that album to your library. iTunes may recognize if you rerip a CD it had imported earlier, but not if the library has been moved between computers or rebuilt in some fashion.
When purchasing from the iTunes or Amazon stores double check that you haven't already got the same content in your library. They should not let you purchase the same album twice from the same store but neither knows about your purchases from other stores or your CD rips and bonus/extended versions of the same album may not be taken as the same thing, even when they only differ by one or two tracks.
iTunes will manage purchases properly, however I would direct the Amazon downloader to place its downloads inside <Media Folder>\Automatically Add to iTunes so that the tracks are added to the iTunes library in a way that avoids the creation of duplicates. You can also move media that you want to add to your library into this folder rather than using File > Add Folder to Library as a way to be certain of what has and has not been added.
I don't use Copytrans or iLibs, but if you are using these to extract content from your devices then consider what you extract and where you extract it to so that you can avoid creating duplicates and keep down your housekeeping.
tt2