Playing via TQ IM is the same game as TQ but with improvements and additional content. One key improvement to me is the ability to trade gear between characters. That is the only reason I found out I was doing the wrong thing as I could not figure out how to do it and Google led me to the the answer - use TQ IM (there are hacks to but that is not the point). Note that TQ IM will import your characters but it loses your quest progress.
Note that TQ IM requires TQ so you do need to buy and install both and I think you need to run TQ once but don't start a character and play using TQ. Don't make the same mistake as me!
Note that if you do make the same mistake as me and want your quest progress back you can get it by copying some files:
Copy the "Levels_World_World01.map" folder from
C:\Users\[username]\Documents\My Games\Titan Quest\SaveData\Main\_[character name]
C:\Users\[username]\Documents\My Games\Titan Quest - Immortal Throne\SaveData\Main\_[character name]
Thanks to the kind folks in the following thread for the answer:http://www.titanquest.net/tq-forum/threads/30693-Titan-Quest-character-to-Immortal-Throne-character-problem