Data recovery on external HDD

If you're willing to fork out $100 I'd say it sounds like something DiskWarrior could likely handle. It is probably major directory corruption. Disk Utility works for low level stuff but can't handle serious stuff. I only need DiskWarrior once a decade or so but when I do it is worth it even though it only really does one thing (directory repair).

Disk Utility but it failed to scan the drive and threw an error saying that it couldn't un-mount the drive.

That may not be related to your data corruption issue. That error could come up, if some other process is currently accessing the external drive. If you have not already, restart your Mac. Then immediately run Disk Utility and try doing First Aid on the external drive.

That's good... 🙂 As a Mac user, you should use the built-in Time Machine feature to back up your MacBook's internal drive and that external drive with your iTunes data, to another larger external drive. You can then easily recover, if you ever have a more serious case of data corruption. Time Machine automatically and incrementally backs up changes to your drive volumes (in the background), every hour that your Mac is running (and the Time Machine backup drive is connected).

Also, thanks for reporting back with outcome.