Yet another way, and easiest, as long as you have your old "Library" file and you music folders/songs are all named the same as when they where on your computer:
Make a copy of your "Library" file and put it in another folder, as this might take a couple goes to get it right.
Open up itunes... but DO NOT play any music.
Go to "Edit" , "Preferences"
Click "Advanced" tab
Change the "iTunes Music Folder Location" to where ever your music is now located
Click "OK"
That should do it. If it doesn't work the first time, close iTunes, delete the "library" file and replace it with the copy you made earlier. (note: the "library" file needs to stay in mydocuments on the c-drive, no way around this).
Thing to note about external harddrives ENSURE YOU HAVE THE EXTERNAL PLUGGED IN BEFORE OPENING ITUNES! as it will automatically change the "iTunes Music Folder Location" back over to the Mydocuments on the C-Drive if the external is not plugged in.
If it ever does, no worries, just follow the procedures I listed above and you'll be fine. (done it far too many times over the years, but it is a bugger to fix as it will take multiple attempts before getting it right).