Help!

You need to do some steps on the old computer first. If everything on your old PC is fine (all music/files are on it, iTunes library on the old PC is fine), then I'd wipe everything off the external drive and start over following these steps:

First, plug in your external hardrive to the old PC and consolidate your iTunes library to the external hardrive. Take note of which letter your PC assigns the external hardrive, as this will be the letter you'll need to use on your new PC (go to "My Computer" and look at which letter is on the drive).

Use iTunes' consolidate library feature to consolidate your library to the external drive. I just make a folder on the hardrive called "music" and consolidate everything to that folder. Since you plan on keeping your music there, that's what I would do. Either "Music" or "iTunes Music", though you can make anything up.

Now, go to "My Documents", "My Music" and copy the ENTIRE iTunes music folder to the external hardrive.

Now, on your new pc, plug in your external hardrive and make sure that the letter is the same on this PC as it was on the old PC. If it's not, run a google search on how to map a letter to an external device. Then, replace the iTunes music folder on the PC with the one you copied from the old PC by going to "My Documents" "My Music" "iTunes Music" and delete that folder, and put in the one you copied. Then open up iTunes. You should see your library as it was on the old PC. Then, you can consolidate your library back to anywhere on the new PC or leave it on the external drive.

There are more detailed guides on this site. Just do some searching around. But you can't just pick folders in the iTunes settings, you have to consolidate the library with the "consolidate library" feature in iTunes.

Sadly, yes.

iTunes doesn't keep things like playlists, playcount, ratings, etc. in the song files themselves, or in the folder where your iTunes music is. It stores them in the main iTunes folder as data files. When you want to move a library to a new computer, you need to copy these files over along with your media files.

All you can do now is start with a new library and add the stuff from your external drive to your iTunes library.