Keep getting the Save As prompt when creating new library

Ok I need help!

1. I open iTunes

2. Dialog box reads "The folder "iTunes" cannot be found ot created, and is required. The default location for this folder is inside the Music folder.

3. I click OK

3. Dialog box reads "Choose iTunes Library" (Quit, Create, Choose)

*There is no library file on my computer*

4. I click Create

5. I click through to the Music--> iTunes folder and try to create a new Library file

6. I click Save

7. The same Save Library box comes up.

*no matter how many times I try to Save it, iTunes doesn't open. I'm basically stuck at the Save Files screen.