Big update today! I'm still working on the portion of the program that adds tracks from other directories to the iTunes library. You can see in the screenshot the new tabbed interface. It may not be my favorite way of doing things but its a simple way of it.
The new folder watch mechanism does what you think it would. iTunes DSM will now scan a directory for files/songs that are not in the iTunes library and add them to iTunes. It first creates a playlist, adds the song to the playlist, which are then added to iTunes.
The playlist must be created as that is the only way to programmatically add songs to iTunes, but once the process is completed you can delete the playlist.
I'm still working out the kinks and the code is really ugly but soon, I'll post a new version. Weekend is coming up! Hope everyone has a good one!