Laptop Cleanup - Question about iTunes music

Okay, I should lead off with the fact that I am not the most knowledgable when it comes to tech issues. I do a lot of recording at home and run it through my Mac which is about 5 years old. It's clearly running out of room because the poor thing can't really keep up when I am recording and playing back.
I have a lot of music on this laptop, but I'm starting to think that most of the albums are on here twice. First as the original download and then again under my iTunes media? Is that how that works? All along I thought it just moved the music from the original download to the iTunes, not just copied and pasted! On top of THAT, I also have the original .rar or .zip files that I downloaded for the album.
I am looking to move all of my music to listen to to an external hard drive so that when I'm recording there would be so much more available space on the laptop. In theory, if I got an external and just copy and pasted everything in the iTunes>iTunes Media>Music folder...IN THEORY...that should move everything over, right?
I have a lot of music on this laptop, but I'm starting to think that most of the albums are on here twice. First as the original download and then again under my iTunes media? Is that how that works? All along I thought it just moved the music from the original download to the iTunes, not just copied and pasted! On top of THAT, I also have the original .rar or .zip files that I downloaded for the album.
I am looking to move all of my music to listen to to an external hard drive so that when I'm recording there would be so much more available space on the laptop. In theory, if I got an external and just copy and pasted everything in the iTunes>iTunes Media>Music folder...IN THEORY...that should move everything over, right?
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Also, have you maxed out the RAM on it? If not, that may be something you want to look into as well.
http://www.reverbnation.com/brianzilm