If you are using iTunes Match to update your music to the higher-quality Store stuff you may run into a duplicate file problem if you don’t Trash the original files first. For example, I’ve got an album of MP3s I ripped in 2002 at 128K and now want the 256K AACs that I can download with iTunes Match. The trick here (explained by Macworld’s Jason Snell) is to delete the tracks and Trash the files from iTunes, but not from the cloud. Then I can click the tracks’ cloud icon to download the new files from the Store. However, if I don’t Trash the files they will remain in my iTunes Media folder heirarchy and when the new AACs are downloaded I’ll have the original MP3s alongside the new AACs.
But, if you get yourself into this situation you can easily find and remove the files that are no longer in your iTunes library (but which are still in your iTunes Media folder) with Music Folder Files Not Added. This app will list the files in your designated iTunes Media folder which are not in your current iTunes library so that you can Trash them (or add them, if you like).