The XML file thing is only necessary if you have information in ITunes, that is NOT in the tags of your files, and you want to import that information into MC. On the other hand, if all the data you care about (Artist, Album, etc) is contained in the file tags of the music files, then there's nothing special required.
I would recommend a few things:
1. Do some auditing to make sure you have everything in MC that you want. You might compare things like number of songs in ITunes versus MC. Or other metrics that make sense.
2. Once you are confident that you have everything, move your music files to a location that ITunes does *not* know about. This will keep itunes from stepping on your files should you ever run it again (accidentally or otherwise). This part can be tricky. I'm pretty good at it because I've done it a bunch. But you might skip this step if you are never going to run ITunes again and it doesn't bother you that all of your music files are sitting in a directory called "ITunes Music".
You can certainly manage everything from MC. Importing, tagging, etc. The tagging window is your friend. Learn to use it. For me, it looked weird at first. Too simple. But then I figured out that simple was elegant in the land of MC. ...and the tagging window is also very powerful.
If there's something we didn't address here, please ask.
Brian.
