I am going to clean up my music library, get rid of the stuff I don't listen to, try and get it down so it will fit on one of those spiffy new 8gb nanos (yes, they are surprisingly nice), so I can get rid of my 20gb U2. Right now I have about 10gb, including podcasts. When I go to the music portion of the library, I can see some purchased music I recognise, but most I don't. I want to keep all my purchased, and just get rid of the extra stuff. Is there any way to go about and hide it, or at least back it up to an archive? I poked around my music folder, it just organizes them by artist, which is no help. There is no purchased folder, that I could simply zip up and stick out of the way.
any thoughts?
-digital 
Why not just organize a 8gb nano playlist (or some lists), and just have it sync those items?
Not sure if it would help or not, but I also recently found about about starting iTunes with option held down. It allows you to start up with a different library, so you can have multiple libraries, and switch between them at startup.
You could do a search for all files with an m4p extension.
If you've got a lot of 'em, you could use Automator to find them, then move/copy them to another directory outside your library.
had to go though it manually, a lot of grunt work, but I went from 8.5gb of music+podcasts (what my iPod currently says, have not synced it yet), to 3.95gb of combined content, and I think that includes a few videos. that's a 4.55gb reduction!!
I think I can now get a new 8gb nano and have plenty of room for videos.
-digital
at the top where you can click title, artist, album ect. right click and make it so you can see kind, then click that, anything you bought on itunes will have a kind of protected AAC, so type protected in the search up top in the right and im sure that will help you alot.
The easy way still would have involved playlists. All you would have had to do was to make a folder you want to put all the purchased music into, go to the iTunes "Purchased" playlist, and select/drag/drop, all the files in that playlist into the new folder.
I'm not sure (since I didn't want to test it for no reason on mine), but I believe that if you hold down the command key while dropping the files, it should move them, and not just copy them from the library, to the new folder, just like in the Finder.