Yes, will work with latest iTunes (several fixes in there for making it work with the latest iPhone remote app too).
Transcoding, you're spot on. It will only transcode if the client requires it, or if you set it to.
Ok, I think I'm making progress. By using smaller libraries, I was able to read the files and iTunes connected properly. I then proceeded onto the whole 120GB of data and after waiting some time, I was able to partially get it to work. Upon reviewing the log file, it appears that I had problems reading the whole library. The log said to the effect "skipping folder <xx> could not allocate memory". So I've got about 1/3 of my library read and it appears to be working correctly.
The other interesting tidbit that I found is that I've got 3-4 listings of each playlist. It's almost as if I've got duplicate entries for playlists. Interesting.
My next job is to see if I can create a stand-alone scanner for the music folder that won't run out of memory and then I'll see if I can edit the database and preserve some fields from my iTunes library. (date added, play counts, etc.)
Maybe what I should look at is a iTunes to sql library converter that will retain play counts, ratings, etc. Does anyone have any experience going through this process so I don't have to reinvent the wheel?
Thanks again for the help,
Tim