Confused about multiple iTunes on same computer

Hiya- I've read as much as I can on multiple iTunes/libraries/accounts and I'm even more confused.
I have one drive partition with all my music which I use as my iTunes library. My wife and I each have our own Windows logins/accounts and access iTunes from each account (sharing the same music folder). This is what I want to do: when I add newly-acquired music to iTunes on my Windows account (i.e. drag new albums onto iTunes and have it copied to iTunes library), I want my wife's iTunes to automatically update its library to see the new albums I've added.
I hope that makes sense. I'm either over-complicating this issue and there's an easy/obvious solution or it can't be done (?) Thanks for any help.
.

Hi, welcome to Apple Discussions.
As I see it the scenario is this:
An iTunes Library at C:\Users\<User1>\Music\iTunes
An iTunes Library at C:\Users\<User2>\Music\iTunes
both of which point to media at some shared location which for the sake of argument we shall call <Shared>\iTunes Media.
(I've assumed <Shared> is not either of the first two folders, neither of which contain a media folder. If the assumption is false post back and I'll give different instructions)
In this case choose one of the two libraries to be "the one" which both accounts will use from now on. Copy the contents of the iTunes folder from that account into the <Shared> folder. Click the icon to start iTunes and immediately press and continue to hold down SHIFT until asked to choose or create a library. Choose the library file in the <Shared> folder. Test that all works well. Close iTunes. Since your <Shared> folder is unlikely to be called iTunes, the main iTunes window will probably have had a weird title just now. Create a new folder called C:\iTunes and move everything iTunes related from <Shared> into it, i.e. the library files called *iTunes Library.itl, iTunes Library Extras.itdb, iTunes Library Genius.itdb, sentinel* and the *Album Artwork* and *iTunes Media* folders. You can delete any .xml files as one will be recreated automatically. Now use the SHIFT-start-iTunes method to open the library at C:\iTunes. Test that all is still well. Close iTunes, switch profiles, use the SHIFT-start-iTunes method to open the library at C:\iTunes. Hooray, both profiles are now using the same library. Any updates you make using one profile will be visible when you open the library with the other.
One possible drawback. If you use the fast user switching method to flip between accounts then you have to remember to close iTunes before swicthing otherwise the second user will find the library is locked.
You might also find the following tip useful:
*How to use multiple iPods with one computer*
The Apple support document How to use multiple iPods with one computer suggests a number of ways. I use method two (Sync with selected playlists) with a slight twist. Rather than regular playlists I set the grouping field to indicate which users should receive which tracks and create smart playlists based on the content of this field.
e.g.
"Alice's Tracks" is "Grouping contains Alice" + "Kind contains audio"
"Bob's Videos" is "Grouping contains Bob" + "Kind does not contain audio"
Tracks that both Alice & Bob want on their iPods have the grouping set to "Alice/Bob"
etc.
I currently manage our family's five iPods using this system, each getting a different selection to suit their tastes and the capacity of their iPod. An advantage of using the grouping field is that it is stored in file tags (for non-wav audio files anyway) so that it is relatively easy to recreate the playlists should the iTunes library get trashed. Also useful if you move files about manually as playlist membership is preserved when you delete & re-import the tracks.
tt2

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