Shim,
You can play sounds using MIDI on the PSR 700, BUT, the MIDI implemtation is very poor, so selection and control of those sounds will need to be from the PC. Pitch bend & Mod wheel (does the 700 have that) should work.

I have been there and used Live-Styler and it worked very well, but the arrangers (all of them) have pretty poor MIDI functions. Korg has the best.