Why does Itunes create a folder within Itunes every time I add a new song?

I recommend that you play with your songs by changing the album title, and by checking the []Part of a Compilation box in the Info Tab. These will change where iTunes places your song. It won't take long for you to see how to manipulate these the way you wish.

It's interesting that at work I have some songs that have paths and names that exceed what XP will handle. I have to shorten the names from what I had on my Mac at home.

 

First, iTunes doesn't add a folder for every song. The iTunes Media folder is categorized by Artist > Album > Song(s). iTunes actually does a pretty good job organizing it's multimedia database.