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I wouldn't worry about legal issues. Your project is non-profit, so artists shouldn't have any reason to complain as long as they are credited. If you want a decent midi to mp3 converter, check this out: http://www.hamienet.com/midi2mp3 Just choose one of five instrument sets, and this site will do all the work. Quality isn't amazing, but I've gotten some nice results. Also, don't think of using mp3 in your game. Convert it to ogg; it has the same sound quality but is significantly smaller. Google for a program called winLAME. It's free and ridiculously straightforward.

Well, if you go with midis' you can always try to find someone to patch them and use high quality patches and convert them to mp3. Kinda like what I did with a sky chase midi. I had it use a nice sounding sax and it really improved the sound... Problem is, it's tricky to find good sounding guitar patches, unless you buy/get one of East West Quantum Leap's stuff... http://www.eastwestsamples.com/details.php?cd_index=1032 or http://www.eastwestsamples.com/details.php?cd_index=1059 Yes, those tracks pretty much were converted from midi... Problem is, it's hard to find good free stuff... Midis could work... at least starting with XP midis are played using MS synthesizer and sound the same on all PCs... Your other alternative is looking for some creative commons music like from here http://jamendo.com'> http://jamendo.com where you can pretty much use it for whatever you want, based on the license... Most of them is just use it but give credit...