When you import a song from a CD or download a song from the Internet, the song file is placed here:
[Home]/Music/iTunes
When you add an item already on your computer to your iTunes library by dragging the file to the iTunes window or choosing File > Add to Library, iTunes places a copy of the file in your iTunes folder. The original file remains in its current location.
You can change this setting so that the item appears in iTunes without being added to the iTunes folder. You might want to do this so that, for example, you could save video files in a location other than your hard disk.
To add files to your library without adding them to your iTunes folder:
Choose iTunes > Preferences, and click Advanced.
Deselect the “Copy files” checkbox.
From now on, when you drag a file to your library or choose File > Add to Library, the item appears in iTunes, but the actual file isn’t copied or moved.
Tip: You can temporarily reverse this setting by holding down the Option key while you drag files to the iTunes window.