DonM, I may not have answered one of your questions properly.

Yes, you can install the Yamaha softsynth and play midi files provided it is compatible with the Windows operating system you are using. I believe Yamaha have updated some of their synths to operate with Windows XP. This will sound much better than the wavetable that comes with your LT. Yamaha's softsynths have a latency around 400 ms so using it for live performances with a keyboard would not work to well. If you used it just for playing midis then there is no problem.

The Edirol HQ Hyper Canvas is of better quality and more usable --- but it also costs considerably more.