Uhhh . . .
For adding music files, just go to "File-Add Folder to Library"
It should add music from the sub-folders as well.
So load CD's to iTunes it's called CD ripping. When you put in a music CD with iTunes open it should ask you if you want to add this music to your iTunes library(Something like that).
If I understand what you mean by "Updating the Library" you mean how do you update your iPod to sync to the new updated library and new songs you added. Go to your iPod in the left side and click it. It should bring up a menu with a little bar on the bottom which shows the space used etc. To the right of this bar is a button with 'sync' right on it. Click it and it should sync the iPod right to the computer.
I used to have a iPod but I switched over to a Cowon O2 - Other brands that are great and somewhat better than the iPod. Mine is a simple drag and drop which I love, but it sorts by folders, so no ID3 tags T_T