How to create new Music library from folder on external drive

Sync Library is off. I only want a local library on my iMac. I go to "Create Library" and navigate to folder on external drive containing music for new library. Only option is Save so I hit it. I get a window saying "loading music library" which soon changes to "Loading iTunes Purchases." The end result is contents of an old library containing 14 songs. What am I doing wrong? Thanks.

Banjoboy