Music has vanished from imac...getting iTunes "!" and cannot find file HELP

I realize that this isn't a hardware problem, but I wasn't sure where else to post this.

My friend (no, not me) was messing around with iTunes, purchasing music, etc. She suddenly noticed that around 50-60% of her music wouldn't play, and as I went through them, they all have the grey "!" next to them. I looked at the info to find the file location, and they all seem to have something like...

file://localhost/C:/Documents and Settings/LastName/Desktop/music/Band Name - Song Title.mp3/

whereas the *working* songs have something like...

Macintosh HD:Users:username:Music:iTunes:iTunes Music:Band Name:Album Name:Song Title.mp3

I've searched and searched and cannot find the missing files. She is also synched up with Time Machine, and when I go into the saved libraries, I still cannot find these songs.

HOWEVER, I can see on iTunes that she literally just listened to them earlier this afternoon. What gives??

I asked her what she did, and she says just imported albums, downloaded a few albums, made a few playlists, and deleted the "On-the-go" playlists from her library.

Am I missing something? TIA

So the missing files are telling you that they are located (using the file protocol) on a C: drive (windows)?
Is there a windows partition installed (via bootcamp or parallels) on that computer? If so, trying loading that up and looking under C:/Documents and Settings/LastName/Desktop/ for a folder called music.
To be honest, I don't understand why the music is located on the desktop in that location... iTunes on windows defaults to either the "My Documents" or "My Music" folder, not the desktop.
Like I say, check there. If not, you might have to send an email to iTunes asking them to let you redownload what you have lost for free. A shame, but these things happen.

First, check that C: location, and ALSO look under the Macintosh HD location for music and see if it is there. If it is, delete from iTunes (but not from disk) and then reimport it back in.

Write back when you have tried this.