iTunes folder has two complete folders

More details? The iTunes folder (by default at C:\Users\username\Music\iTunes) will normally have a folder structure as follows:

However, it is possible to have a mixture of the pre-iTunes 9 folder structure, which has an iTunes Music folder, containing one folder per artist for music, plus folders for audiobooks, TV shows, podcasts, etc.) and the current structure - as illustrated above - where there is an iTunes Media folder that has one subfolder per media kind. See turingtest2's user tip on Make a split library portable for more details and the steps that may be needed to bring your library into a "well formed" layout.