In iTunes: select the format and bitrate you want in "Import Settings" under Preferences->General. Once set, select any track or number of tracks, right-click, "Create xyz version" (where xyz is the format you chose in "Import Settings").
The converted tracks will have the same name and metadata as the originals, to distinguish them enable the "Kind" column in your iTunes library.
To locate the tracks on your harddrive, right-click, "Show in Finder" or whatever it's called in Windows.