Is there any special way I should backup my files .... TO my computer? so whenever I play a song, it plays it from the main computer?
or should I just drag the itunes library as is directly to the computer's hard drive?
I hope the question makes sense. Thanks.
If I understand you correctly, your main library is on your external drive. When you import new songs from a CD, do they go onto the external drive, bypassing your internal drive?
If that's the case, it's pretty easy to deal with, especially since iTunes 7 allowed for multiple iTunes libraries (like iPhoto). First, if you've got the space and to be super sure, just duplicate your 'iTunes' folder on your external drive. Now, move the iTunes folder (in the Finder) from the external drive back onto your internal drive. If you want it standardized, move it to ~/Music/iTunes. Within that iTunes folder there should at least be an 'iTunes Music' folder, an 'iTunes Library.xml' file and an 'iTunes Library' file (strictly .itl but it probably won't show the extension).
If there is already an empty iTunes folder in your ~/Music directory (perhaps with the two 'iTunes Library' files and an EMPTY 'iTunes Music' folder), you can safely delete that folder before moving the iTunes folder from your external drive. If there is content in the library on the internal drive, then you need to look at consolidation as others have mentioned.
When you've moved the iTunes folder into ~/Music, start iTunes while holding down Alt (UK keyboard) / Option (US keyboard). Carry on holding that down while iTunes loads, and you should be presented with a box giving you the option of choosing your iTunes library. Navigate to ~/Music/iTunes, choose the 'iTunes library' file (not the .xml file) and iTunes should load, with all the content as it was on your external drive, but this time being accessed from your internal drive! To double check, do a 'Get Info' on a few items and check the path of the music files.