I just backed up and then deleted the "iTunes Library.itl" file and ran itunes again, and when I go to the apps tab after the iphone is connected, the check box is not ticked and when I tick/check it, it gives the message:
"Are you sure you want to sync applications? All existing apps and their data on the iphone will be replaced with the applications from this itunes library".
It would seem to suggest therefore that if I am at that stage and looking at the greyed out apps (approx 80), not all my apps on the iphone (approx. 100 apps) are on the Itunes version, so it will replace the 100 apps on the iphone with the 80 from the desktop.
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It doesn't matter. It just doesn't. If it deletes the Apps on your iPhone, you just download them again. If you've paid for them, you'll be able to re-download them for free, as long as you are logged into the iTunes store using the same iTunes account as you were using when you bought them. If you've forgotten which Apps you own, you can look in your iTunes account, which keeps a complete record of everything you've ever bought, including Apps.
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In ishcabittle early posting, he said that some apps can still be in the My Documents > My Music > iTunes > iTunes Library > Applications. That seems to be the case, but what I dont understand is why iTunes doesn't see it automatically as I have so many there. Can it not just "see or read the apps"?
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Again, it doesn't matter; you just download the apps again if you've wiped them out.
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Also in reply to your point above:
1. What is the difference between draging a song into iTunes or adding a folder to library / add a file - it is the same thing right?
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Same thing. Either way, you are importing the song's meta information into your iTunes library. Whether you are copying the song itself will depend on whether you have selected "Copy songs into iTunes Media Folder when adding to library" in Edit/Preferences/Advanced in iTunes.
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3. What does "backing up iphone" actually do when I connect my iphone to iTunes. What is it backing up and where to and why does it take so long?
It is backing up your general configuration settings (preferences), contacts, etc. It is NOT backing up your songs, or your passwords.
4. How do I get photos off the iphone and into a folder on the PC? At present the the "Sync Photos" from myPictures is deselected. I am concerned that as above, if I check this box, it might wipe all my camera photos on the iphone and then copy ones from my desktop PC?
As Speedy(Typer) posted, you can see your pictures in My Computer, in your iPhone, which will appear to be connected as a camera. If you're concerned about overwriting them, you can copy them to your PC. You could also just email the pictures to yourself from the iPhone if there aren't very many of them.