Bizarre bugs aren’t entirely unprecedented in iTunes updates. Here’s a real classic from 2001:
Apple has identified an installer issue with iTunes 2.0 for Mac OS X that affects a limited number of systems running Mac OS X with multiple volumes (drives or partitions) mounted. For those systems, running the iTunes 2.0 installer can result in loss of user data.
Basically, if you had similarly-named partitions or drives mounted, the iTunes 2 updater would erase them.