iTunes 10.7 ....

no... can you give a bit more detail of exactly what you can't do? You can't buy music? Or you can't rip music from a disk? Or add to the library from a file?

 

Why copy and paste?
move the file to the iTunes music folder

then

right click or press and hold 'control' and click file, then choose 'open with' from the pop up menu and choose itunes

The file should then appear in 'music' library of iTunes

 

How is your music encoded?

 

There's no copy/paste for adding music with iTunes.

Either go through iTunes File menu > Add to Library

or simpler still, drag the music files from wherever they are, and drop them onto the Library section in the iTunes sidebar (where it lists Music, Movies, ..).

If you have 'Copy files to iTunes Media folder' checked in iTunes > Preferences > Advanced (I think it is checked by default), it will then copy the music files to the Music folder in your user account

 

Still haven't answered. How is your music encoded?

For example. FLAC isn't supported in iTunes. ALAC is.

 

Find one of the music files in Finder, select it, and from the File menu, choose Get Info - what does it say next to Kind ?