New to Lightroom - Where do I set up my catalog?

I just downloaded a trial version of Lightroom, been using Canon DPP, and I have my picture files stored in my "Pictures" library on my C drive and backed up to an external harddrive.  When I first tried to open Lightroom it indicated that I had Lightroom compatable catalogs (I have Elements 6 that I use) but I foolishly skipped by that and clicked on something like "create new Lightroom Catalog".  When that started to run I cancelled out of that because I thought that I might now be creating duplicates of all of my pictures and I only have about 100 gigs left on my 1 tb. harddrive.  Now when I open the trial version of Lightroom I don't get that original prompt and don't know how or where to designate my Lightroom Catalog and don't know if by creating a Lightroom Catalog I'm actually duplicating files.
Any help is greatly apprectiated.
Thanks

Thanks for the prompt replies.  I'm not at my home computer at this time but will try to set up a catalog file in my Library folder that gets backed up on a routine basis to an external hard drive.
If I'm reading the replies correctly I should be able to just create a new file, label it Lightroom 3 and then designate that to contain my Lightroom files, right?
Thanks again

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