MBP: The itunes library file cannot be saved. A folder was specified instead of a file

I've started getting this error on my MBP from iTunes:
I am running a MacBookPro with Snow Leopard 10.6.7 and iTunes 10.
Other than this warning, I can't detect any operational problems with iTunes, but rather than mask it, I'd prefer to fix it.
The my root iTunes directory and its contents all appear to have proper ownership:
mystic:~/Music/iTunes jrh$ ls -l
total 69088
drwxr-xr-x    5 jrh  jrh       170 Sep  9  2008 Album Artwork
drwxr-xr-x  106 jrh  jrh      3604 May  5 00:04 Mobile Applications
drwxr-xr-x   16 jrh  jrh       544 Apr 28 00:30 Previous iTunes Libraries
-rw-r--r--@   1 jrh  jrh   2430114 May 22 07:32 iTunes Library
-rw-r--r--    1 jrh  jrh    528384 May 21 17:02 iTunes Library Extras.itdb
-rw-r--r--    1 jrh  jrh  21348352 May 21 17:06 iTunes Library Genius.itdb
drwxr-xr-x  705 jrh  jrh     23970 May 21 17:01 iTunes Music
-rw-r--r--@   1 jrh  jrh  11058893 May 22 07:32 iTunes Music Library.xml
-rw-r--r--    1 jrh  jrh         8 May 19 08:04 sentinel
I am not sure what the sentinel file is. It contains 8 nulls:
mystic:~/Music/iTunes jrh$ od -c sentinel
0000000   \0  \0  \0  \0  \0  \0  \0  \0                               
0000010
Any help would be appreciated

I've made some progress. In iTunes preferences/advanced you can re-set warnings. Repairing Disk Permissions on your boot drive will help when iTunes won't start. In addition to the saving issue, I've suffered through the problem of iTunes creating multiple .tmp files. With iTunes closed you can delete these files.
I also found these two threads helpful and have turned off local snapshots for Time Machine.
https://discussions.apple.com/message/17692965#17692965
Re: iTunes 10.5: Permission issue with the iTunes Library file...http://Pondini.org/TM/30.html
I have restored Lion once and it was easy. No disc required as Lion creates a recovery file on your computer, Instructions are here http://docs.info.apple.com/article.html?path=Mac/10.7/en/mchlp1599.html
Hope this helps.
Steve

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