Hello Tom,
A midi file contains the instructions to playback your midi-instruments only.
A Kar file contains the lyrics as well.
About midi;
A *.mid/*.kar file does not contain any sound!
These files only have the instructions how to playback midi capable instruments.
Your psr has rom sound banks which will receive instructions from the midi file how to play back the sounds from your soundbanks.
A good place to learn about midi is midifarm as they have a section where most of midi is pretty good explained.
Above description also makes clear why it is difficult to convert from an audio file (wave/mp3 etcc..) to midi.
Unless there are only a few instruments in the audio file it won't work.
A midi file directly converting to audio(mp3 or wave) is impossible as the midi file does not contain any sound!
Ofcourse you can playback the midifile through your psr and then record the audio!
But that's not converting , it is playback and then recording!
Here's the link for midifarm.
http://www.midifarm.com