Hi mash,
When you delete the Library database from the Library preferences panel it really shouldn't matter whether the files have been moved or not, as the actual database file gets deleted.
Just to clarify, you did use the "Delete Library Database" button in the Library preferences panel?
If so, please tell me what operating system you're using and what sort of user account you're using (for example an administrator account or a standard account).
Regards,
Jo