I have a Library.xml file, and want have its contents in iTunes. If I follow the recommended "File -> Library -> Import Playlist" option for this, it tries to copy all my songs into the iTunes Media folder, probably because my Library.xml file references all its songs on a networked drive.
Recreating iTunes .itl database from .xml file without itunes copying songs
importitunes
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You never said whether your hard drive is dead. If it's not, pull it out and use it as an external drive (with the help of a SATA-Firewire adapter). Use Migration Assistant.app to copy over your music, or just copy your iTunes folder (e.g., "~/Music/iTunes Media/").
Then, the next time open up iTunes, hold down alt as you tell it to open. In the following dialog box, select the new location of your iTunes Media folder.
My apologies if your hard drive is legitimately dead. I don't yet have privileges to comment on a question, which would have been a more appropriate vector for asking you to clarify the state of your hard drive.
In iTunes > Preferences > Advanced
Uncheck Keep iTunes Media folder organised and Copy Files to iTunes Media folder when adding to Library
Screen shot provided by @Wheat Williams:
Best Answer
Turns out that the one step I was forgetting was to reset the iTunes settings after removing my .itl database and library .xml files so that iTunes did not "organize your library" and "copy songs to itunes media folder after adding to library".