iTunes & Rekordbox Sync Disparity

Short Background:

Whenever I've purchased songs from iTunes I've always converted them to Mp3 and then deleted the original files. I've always done this because when I first got iTunes, the purchased file types weren't always compatible with other programs I used, i.e. Traktor.

With iTunes, you can select "show only music stored on this computer" to prevent the purchased files (which are stored in the cloud) from showing up in your library. I have this option selected, obviously.

When I browse through iTunes folder tree in the Rekordbox however, all these files show up! So I have a crapload of duplicate entries, but half of them don't even exist locally on my computer.

This does not occur when I browse the iTunes folder tree in Traktor.

I hope my explanation of this issue makes sense?