iTune Options When Ripping - Need Clarification

[fullrun]

I am new to ripping a CD music collection - so, please excuse what might seem to be obvious ... I will be ripping and archiving my collection onto an external drive. I want these files to be saved and cataloged onto that external without being duplicated into my current iTunes Music Library. I'm using my iMac to do the ripping and storing which is easier and more convenient than doing it on the MBP which will eventually be my designated audio server.

I'm not quite sure how to set the iTunes options on the Max app so that it happens... nor am I quite sure that I understand one of the options. If you address the following questions, it would be greatly appreciated:

• Am I correct - if I want the above to occur - to be sure that "Add to the iTunes Library" and "Add files to playlist" are unchecked
  Be sure in the Output tab - that all files are going to the drive and folder that I have designated.
  What does "Use iTunes Compatibility Mode" option mean

• Lastly, when I have finished the ripping... connect the external drive to my MBP audio server... and point the iTunes app on the server to the music folder on the external drive.. will iTunes automatically recognize those files as its music library.

• If not, what is the procedure that I need to follow?

Thanks for your time on this..