Hi thomasmontalto,
Thanks for visiting Apple Support Communities.
This article can help with iTunes media organization:
iTunes: Understanding iTunes Media Organization
http://support.apple.com/kb/ht3847
I'd suggest first making sure iTunes is set to organize and consolidate your media into the iTunes Media folder.
If you want the new organization method on an older library, upgrade to iTunes Media organization by choosing File > Library > Organize Library
Next, you should be able to manually make sure that the iTunes Music folder no longer contains your media, and remove the folder.
It's always a good idea to back up your iTunes library before making any of these changes. The first step of this article also goes over consolidating your media in more detail:
iTunes: Back up your iTunes library by copying to an external hard drive
http://support.apple.com/kb/HT1751
Best,
Jeremy