moving iTunes library and iPod Touch question

I'm currently running an XP sp2 machine and have my entire iTunes library consolidated on an external HD (consisting two subfolders - Album Artwork and iTunes Media (residing inside the latter is all my Music files,podcasts,apps, audiobooks,etc, organized as subfolders of iTunes Media) and a library.itl file and some itdb files). I want to move that entire library onto the new iMac and off of the external. Am I correct in understanding that I would just go to the new iMac, open ~Music and then move the iTunes folder that I find in there to the desktop and then copy the iTunes folder from my external into the ~Music directory and then trash the iTunes folder that I had moved to the desktop? Would that do the trick? Or would I just drop the external iTunes folder right on top of the iTunes folder on the new iMac - would that replace it correctly?) i.e., I'm not sure why it is necessary to move the iTunes folder out of the ~Music folder and onto the desktop before moving the iTunes folder off of the external and into the ~Music folder>

And when I plug my Touch in to the new iMac - what happens there? Will it erase everything on my Touch first or?? I don't want my entire library synced to my Touch - that's not the way I have it currently. I have only selected music,podcasts,audiobooks on the Touch. How do I keep that current selection when I move to the new iMac?

Thanks,
Mark

Not sure if this is the best way, but it worked for me.
1. Make sure the existing drive with the iTunes lib is available on your iMac.
2. Start Itunes while holding down the "options" key
3. Select new folder (since the default is in your Music
4. Point to the iTunes lib on the external drive.
After this is working, exit iTunes, repeat above pointing to your local Music Folder.