erasing all music from iTunes and starting over from an external hard drive

Hello,

I tried moving all my media to an external hard drive to make room on my MacBook Pro and just be able to run the media (ie music movies etc) from the external hard drive when it was connected.

Well this backfired big time probably because I did not follow any sort of instructions.

1st I backed up Finder > music > iTunes > iTunesMedia folder to two seperate external hard drives just in case.

2nd I think (this was back in March 2013) I decided to cut/delete the folder Automatically Add to iTunes and moved it to one of my external hard drives (this folder for some reason contained mostly everythiing that was in the iTunes Media folder).

3rd I finally decided to erase content from iTunes Media Folder

4th I deleted the iTunes Media folder because I felt it was stupid to have a "iTunes Media folder" and "iTunes Music Folder" in the same place but not actually have anything in the iTunes Music folder (probably really stupid of me in retrospect)

5th I unchecked the box under iTunes > Preferences > Advanced "Copy files to iTunes Media folder when adding to library"

6th I believe I changed the location of "iTunes Media folder location" in the Advanced area under Preferences thinking this should be pointing to my external drive

I then believe I tried to run iTunes and play my content, but when I did all it did was copy my music/media back to my MacBook Pro hard drive but I did not realize it was doing this until later the next day when I tried to play some music and realized I had 3 copies of everything in my iTunes program (ie music movies podcasts tv shows etc) however, I could play all three versions of whatever it was I selected there was no "error message" saying that iTunes could not located that file, would you like to try and locate.

So I checked Finder to see if there were 3 copies of everything (by the way at this point I stopped connecting my external hard drive for the sake of making more copies on iTunes) but there wasn't??? So I tried to go through Option+View > Show Exact Duplicate Copies and delete all but one of the items. When I would delete them and it asked if I wanted to move them to my Trash Bin I clicked yes and all the 2nd and 3rd copies were gone!!! Yeah, so when I played those songs/movies that remained they would play!!!!!

Than I realized that my Internal Hard Drive was almost full and went looking around for things I could delete to help make my MacBook run better, and realized that my Trash had a large amount of data in it and that emptying it would significantly reduce space on my Internal Hard Drive, but when I went back to iTunes and selected music or movies to play it placed the infamous "!" next to that track or movie and it could not locate those items anymore?

Long long long story short hopefully, can anyone help me set up iTunes so that it only can play content/media off of my external drive and not take up space on my internal hard drive? Is this even possible to do that or will always start to copy those files from the external hard drive back onto the internal hard drive? and second is there anyway to use the Apple router external hard drive to use as the source for all my media?

PS I am running Mac OS X Lion version 10.7.5 and iTunes 11.1.3 (8) 64-bit