How do I use an external drive with iTunes

I want to use an external drive (Windows XP & USB) for My Music Library. iTunes is running on the 'C' drive and points to the external drive. When I 'add folders' the music is available and plays, but I don't have my playlists or the play count / last played data. I have copied the 2 iTunes Library files into the exact same location on the external drive (My Music\iTunes). Either iTunes or Windows moves these files to the 'C' drive My Music\iTunes folder, and I don't have problem with these files on the 'C' drive as long as the music/video files reside on the external drive. I would like to set this up so the external drive looks and responds just like if the library was on the 'C' drive.
Can someone help me get this right so it works?
Thank you very much
iPod 60GB Video   Windows XP   USB 120GB External drive w/42GB of My Music

Have a look at this article in the Apple Knowledge Base.

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    I am trying to find Leone who had a great post May 2014 to Diane. I posted tho same message as a 'Reply' to the Leone/Diane posts but then was worried it would not show up since that was some time ago so I decided I should post it as new.  Apologies if it comes through twice.   I am having trouble as indicated below:
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