2 user accounts, 2 itunes libraries, 1 shared media folder - external drive

Hi--
I've researched this to death, and have not found any answers.
So my wife and I each have individual
- Apple IDs
- user accounts on a shared mac
- itunes libraries (in our user/music folders)
We have one massive 500 GB media folder on a non-startup drive, that I'd like to be the source for the actual music in our respective itunes libraries. I've pointed the the "iTunes media location" (under Prefs > Advanced) at this folder repeatedly.
The media in that huge folder does not show up in my wife's itunes. It is too big to be moved to the startup drive to store in Users/Shared or Public.
I have tried alias and symlinking to no avail. I believe it may have to do with permissions and have downloaded Batchmod but am unclear what I should set the permissions on
Also I assume this has nothing to do with File Sharing?
Somebody out there must have gotten this to work...
Thanks for all advice!

Chris - again many thanks. I think I am 95% sure I'm understanding.
As you've laid it out below, if either one of us rips a CD in our individual accounts, the actual MP3s (or AACs) WILL be added to the giant itunes media library on the external.
HOWEVER, those newly ripped songs will ONLY appear in the account of the person who did the ripping. So the only workaround is to periodically "re-add" the entire giant media folder to each person's library? (assuming this won't create duplicates)
Chris CA wrote:
redzep wrote:
Chris, Thanks so much for your prompt and helpful reply. Just to clarify:
1) I need to "add to library" and select the entire 500 gb media folder
Yes.
Mkae sure iTunes prefs > Advanced - iTunes media folder location is pointed to the iTunes media folder on the external.
BUT make sure that
"Copy file to iTunes Media folder when adding to library" is UNCHECKED, right?\
This should be checked so when either of you adds antyhthong, it will get copied to the iTunes media folder on the external.
If the other adds something to their library by selecting something already in iTunes media folder, it will not get copied there again.
Then she should see the same music, be able to drag/drop to her iphone, make her own playlists etc. right?
Yes.
The iTunes library,itl file (tells iTunes where everything is, what the playlists are, ratings, etc.) is in the /Music/iTunes/ folder on your internal.
2) But if either one of us adds some music, it will not dynamically update in the other one's itunes? Does this apply to both music ripped from CD as well as itunes purchases (from our respective accounts?)
Correct. it will not update the other person's library.
This applies to everything.

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