Getting started again advice for a newbie

Here are the facts. I am returning to the hobbie I love. I was in retail at a small store for a/v and found it a great way to enjoy things I can not afford, but have been away since 98. I have a large cd collection of aprox 2000 cd's or more, some I care about others were used to DJ, however I would like them all stored. I have a 1 year old macbook pro. Last time I tried to load all my music on a pc I crashed it and lost everything. I am not looking to replay that. What I want to do, if it is possible, is store all my music on separate hard drive in lossless form, and to be able to back it up storing off site. My big question is, am I able transfer from the hard drive in in full size to another location such as my macbook in a compressed form. Does itunes allow this to happen yet? Bottom line can I run 2 music libraries one for quality and master storage, and one for ipodes and compressed functions nonaudiophile grade.
Yes, you can run two or more libraries on Itunes from your Macbook. Where you keep the seperate libraries is inconsequential.

As far as changing the file size on the fly, I don't think that will work. If I understand, you'd like to store music in an uncompressed format such as .AIF and have it change to .AAC or something similar on the fly? Why would you want to do this? Itunes will simply play the uncompressed file from the external HD without taxing your Macbook.
Geotic (or Sammie, etc), I have been thinking about playing all of my cd's from an external HD through my main system. I am very new (your "newbie" title drew me in) and am wanting to know how you plan on doing it?
I've heard "get a squeezebox and couple it with a really good DAC" and "get a macbook", etc.
I guess my question is - what is the best route to get the best sound from music that is on a CD now, but will be put onto a hard drive in the future?
Assuming you have an Apple laptop, I would suggest you download/install one of the following ripping programs: MAX or XLD with preference going to XLD. Download the XLD GUI version from here:

Then do a search on "How to properly set up XLD ripper." Some good sites will come up. Most notably, you have to look up your CD Rom drive offset value and enter it into XLD preferences before you begin ripping. It is a little complicated intially, but XLD is suprisingly easy to use.

Supposedly these programs offer better rips in comparison to Itunes. I have no idea.

I would suggest you rip your files to AIFF, which is Apple's version of WAV (uncompressed file). Or, select Apple lossless for a smaller file. You can always change the lossless file to the uncompressed AIFF version if you choose. They sound identical or nearly so.

Once you have a few CD's ripped, add them to your Itunes library. Itunes provides the best player interface (IMO). Plus, you can use the Frontrow program, which is very cool. Early on, my laptop sat on the top of my audio rack. We used the little Apple remote and Frontrow program to move through our music library. It worked great!

Again, presuming you have an Apple laptop, I suggest you get a USB or Firewire DAC. That is the simplest way to get great sound from your computer. Squeezebox would work as a DAC and also display, but it is not as slick as frontrow and you have to use their music catalog software/player instead of, or inaddition to Itunes.
I have the MAC Book Pro computer as my music server connected to the Ayre USB DAC. I am using the Seaport Free Agent Go Pro 500GB external hard drive to store my music files. I also purchased a 2nd Seaport drive for backup purposes. Seaport drive #1 is using the Firewire connnection and Seaport drive #2 is using the USB connection. I suggest you look at using an external hard drive and backup it up to a 2nd external hard drive.
Very insightful! Thanks!
And I assume you can't tell the difference between CD and lossless? I've never heard it myself and have been suprised by people who said they could.