Okay, so you upgraded iTunes, or is this an ancient computer (all of the ones I have seen in the past decade or more all came with iTunes already installed)? You opened iTunes. You dragged audiobook files from a USB flash drive to a playlist in iTunes. It immediately gave you a ! next to each file you had added only a few seconds before? You then go back to the drive (you say "folder" but which folder exactly?) and click a file and it opens (presumably in iTunes though you do not say) and plays. That's what I am understanding from your somewhat short description. I have the underlying suspicion that everything is there and working but you're jumping too fast to find it.
Reinstalling the application does nothing to playlists. They are stored in your .itl file in the iTunes folder. This files is your "library" pretty much, and works with whatever iTunes you have installed (to a degree).
If you really want to get rid of everything (which is not necessarily warranted here though the slash and hack approach so far may deem it necessary), delete the whole iTunes folder in your Music folder, then empty the trash. I hope you have copies of all your media files elsewhere too because some (such as audiobooks) cannot be re-downloaded from the iTunes Store. The next time you start iTunes it will ask if you want to create a new library which will be completely devoid of anything.
What are the iTunes library files? - http://support.apple.com/kb/HT1660 More on iTunes library files and what they do - http://en.wikipedia.org/wiki/ITunes#Media_management What are all those iTunes files? - http://www.macworld.com/article/139974/2009/04/itunes_files.html Where are my iTunes files located? - http://support.apple.com/kb/ht1391 iTunes 9 [and later]: Understanding iTunes Media Organization - http://support.apple.com/kb/ht3847
