Organizing mp3 files in Artist and Album Folders

Which is the setting that I should change so that iTunes can organize my folders automatically?

Thanks

Thanks. I had a few more questions:

1. Say I have music in a folder that I have created in my data drive and have the following:

(Checked) - Keep iTunes Music folder organized (Place Files into album and artist folders, and names the files based on the disc number, track number, and the song title)

(Not Checked) Copy files to iTunes Music folder when adding to the library.

Will this change the folder and names of my music when I add the music to the iTunes Library if the music that I have is not in the iTunes Music folder OR will the files be unchanged?

2. Say I add a folder with music to the iTunes Library and I add another folder with music to the iTunes Library. With the following:

(Checked) - Keep iTunes Music folder organized (Place Files into album and artist folders, and names the files based on the disc number, track number, and the song title)

(Checked) Copy files to iTunes Music folder when adding to the library.

If each of the folders added contained the same music file, would one of the duplicate files be deleted or would the two files be placed in the iTunes Music Folder and possibly renamed?

THANKS

Thanks for your help, it has help me a lot in terms of what I am trying to do with my music files and iTunes. I had a few more clarifications and questions.

Method 1: I was trying this with a few music files. It didn't renamed the music files as you mentioned. So I think as long as I don't have my music in the iTunes Music folder created by iTunes, then it will not renamed the files.

Just want to confirm this with you: So there is two ways to organize my files in to Artsit and Albums.
Way 1: (Checked)- Keep iTunes Music folder organized AND (Not Checked) - Copy files to iTunes Music folder. In this method I have to manually move my music from my backup drive to the iTunes Music folder. Then I would use the use "Add Folder To Library" and select the music in the iTunes Music Folder.
Way 2: (Checked) - Keep iTunes Music folder organized AND (Checked) - Copy files to iTunes Music folder. In this method I would juse use "Add Folder to Library" and select the music which is located in my backup drive.

Does my explanation of method 1 seem correct?

Do the two Ways also seem correct? Do you see any Pros or Cons with Way 1 over Way 2? Which one do you prefer using?

THANKS ALOT

I just used "Way 2" to organize my files in the iTunes folders. THANKS.

But now I am planning to use my "Way 1" from now on to manage my music files. Let me see if I could explain why I am trying to use "Way 1". Now I have two sets of music folders that I am trying to manage. I have "My Music CDs" folder which is complete ripped CDs which can be composed of compilation or various artist, so I am keeping track of that one mannually in my backup drive. I also have all my other music which can might contain only one song of an artist (so these are not complete CDs) in the "iTunes Music" Folder.

So the reason I am planning to use "Way 1" is because when I "Add Folder to Library" and I am selecting from "My Music CDs" I want them to be added to the library but not to be copied to the iTunes Music Folder. Then say I get 10 songs, I plan to place them in the iTunes Foder manually, then I will "Add Folder to Library" those files, so they will be organized within the iTunes Folders.

Just want to confirm if this make sense now?

THANKS THANKS