1. Make a smart playlist called “All Files” with this rule: “Artist” is not “123456789″ (or any nonsense name that won’t be in your library).

2. Make a static playlist called “All Live Files”.

3. Make a smart playlist called “Missing Files” with these rules: Match all of the following rules, Playlist is “All Files”, Playlist is not “All Live Files”

4. Select all the files from “All Files” and drag them into “All Live Files”. The dead files marked (!) will not copy over.

5. “Missing Files” will contain all of your dead files. Select all and delete. Voila, a nice clean iTunes library.

I have these three playlists in their own folder. Whenever I gather more than a couple dead tracks for whatever reason, I delete all the tracks in “All Live Files” and repeat steps 4 and 5.

NOTABENE: when you select all files in the Missing Files Smart Playlist, Delete option is grayed out. You need to use key combination SHIFT+DELETE in Windows and OPTION+DELETE in Mac to perform deletion.