Like Steve said, if the .kar file has lyrics, it automatically loads in with the midi file.

To access the lyrics from the .kar file:

Song mode
Access the .kar file
While in Songbook mode - select the lyrics tab on the bottom of the screen

To link lyrics to an mp3:

You must save lyrics to a word document, save as a text file and put it on a pen drive
In Songbook, page 2, simply hit the 'browse' feature, which will bring up the text files
Select the correct text file and save it (you don't have to do any more after that because it is linked forever (as long as you have the pen drive in)