Yeah I had this problem too stateof2005.
If you look on the iTunes discussion forums on Apple.com they have a fix there by moving your old iTunes_library.txt file back into the iTunes Music folder and deleting the new one. That way you'll keep all your stats involved with your music. Seems to work well for most people who've had the problem.
Unfortunately it didn't work for me though. I tried to add the folder through iTunes preferences but that still wouldn't work. After re-installing a few times I ended up dragging (selected all) all my artists folders (containing the songs) into the iTunes window just as you would a normal file. iTunes then recognised them from there. It was weird. Sucks to lose all your playlists and playcount etc but at least I didn't have to re-ripping them all.
Incidentally I think I hosed my update by force-quitting the Quicktime update which I thought had hung......