on a PC the info window which appears following the change of music folders says, "would you like iTunes to move and rename the files in this new folder to keep it inline with your preferences of Keep itunes organized." . or words to that effect.
Hmmm, well perhaps it is different then. Thanks for pointing that out. On a Mac it would put your entire library on your external drive, given those instructions, leaving a copy of whatever was anywhere else in place. Again, PC seems to make everything oh so much more difficult :-)

