Can't convert AIFF to MP3

Can’t convert songs in iTunes. I have iTunes 7.02. I’ve followed the process as detailed in iTunes help as well as in a “missing manuals” book.
Here’s what I’ve done to try to change a song from AIFF file to MP3:
1) In iTunes, chose iTunes > Preferences
2) Chose “Advanced”
3) Chose “Importing”
4) Was told to use “Pop-Up” menu to select between: AAC, AIFF, Apple Lossless Encoder, MP3, or WAV;
However, there is no “Pop-Up” menu........never has been;
So,
I used the “Import Using” window and scrolled to select MP3
5) Clicked “OK”
6) In an iTunes Playlist, clicked once to highlight the song I wanted to convert from AIFF to MP3
7) Went back to Preferences > Advanced to try and click “Convert Selection to MP3”............. But,
there is no such command in the Advanced, Importing window.
Presumably, after you do that (which I couldn’t) iTunes automatically converts selected song to the format I’ve chosen, plays it through while converting, resulting in a duplicate song, only in MP3 format. The original AIFF song is supposed to remain in the Library.
So why aren’t things happening they way iTunes Help and the book I’m using said they would?
Finally, after changing things in iTunes Preferences, how do I leave "Preferences": for example: should it always be left: Import Using: AIFF Encoder and Setting: Automatic?
My iMac specs should be listed below.
Any suggestions? Thank you in advance.

hi nemateoz,
here are some clarifications;
"However, there is no “Pop-Up” menu."
correct, its a drop-down list.
"Went back to Preferences > Advanced to try and click “Convert Selection to MP3"."
no, this option isn't located in the Advanced tab from the iTunes preferences but in the menu "Advanced" of iTunes (as Files, Edit, etc). This may be confusing thaugh.
"The original AIFF song is supposed to remain in the Library."
Correct; files will be duplicated. if you want to sort them easily, right click on any colum title of your library view and select "Genre". this will add a colum showing the file genre (aiff, mp3, etc) so you can sort them.
"So why aren’t things happening they way iTunes Help and the book I’m using said they would?"
i don'T know where you got your information. maybe you just got confused between advanced menu and advanced tab in preferences.
"Finally, after changing things in iTunes Preferences, how do I leave "Preferences": for example: should it always be left: Import Using: AIFF Encoder and Setting: Automatic?"
depends on what you would like. usually, people will convert aiff files to mp3 or m4a directly from CD; i.e. after inserting a CD, by just clicking "Import CD" button on the lower right corner will import/convert files based on your itunes preferences settings.

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