Changing this setting does not point iTunes to existing files. It only determines where iTunes will place any files added after that point.
Thanks for correcting me on that, Herman.
If you simply copy as I suggested it will continue to play the files off of the original drive and once you reformat it you will need to delete the old iTunes library and add all of the files back into the new iTunes library. Easy enough to do but consolidating is easier.
The files would be deleted from the original drive during the re-formatting process anyway (at least when using typical reformatting methods), and so they would have to be copied back to the original drive in any event.
So if I'm understanding this correctly, and assuming that all of the music files are presently in one folder location on the existing external drive, the reason to change the pointer in advanced preferences and then use the consolidate function would be if Howard wants to end up with the existing drive serving as the backup drive.
If he wants to end up with that drive continuing to be the one used for playback, then your original suggestion should work fine (as long as the existing drive is assigned the same drive letter following re-formatting, on the specific computer). Although alternatively the pointer in advanced preferences and the consolidate function could be changed/used twice, first to copy to the new drive and then to copy back.
However, it should be pointed out that the drive letter assigned to a given external drive may be different depending on what computer it is connected to.
So in the light of the correction which you indicated, I guess what we are saying is that if the drive is connected to a computer on which it has not previously been used as the library store location, the advanced preferences in the iTunes program on that computer should be set to point to the iTunes music folder on that drive (based on the drive letter which is assigned to it by that particular computer), and then the consolidate function should be run.
A couple of additional notes, for Howard's information:
1)Windows XP, at least at some point in the past, and perhaps even now, could not create a FAT32 partition larger than 32gB. I'm not sure about Vista or Mac's, in that regard. In any event, there are lots of third party programs which can do that.
2)A FAT32 partition has a 4gB limitation on the maximum size of an individual file. That shouldn't be a concern for music, but it could be a problem if you also wanted to store video files on the drive. Keep in mind that multiple partitions can be set up on a single physical drive, if need be, one as FAT32 and one as NTFS for example, each of which would be assigned its own drive letter.
I really don't know much about all of this -- as is doubtless obvious from this post
As all of this makes clear, even those of us (like me) who have very extensive computer experience and expertise can be just as confused! :)