i do this a lot, but i don't have an MD with the pc link. i just use the line out on the MD into the line in on my G4. first off, what kind of mac are you using? second, i don't think you want to convert your MD audio into mp3 then record it onto a CD if you are making an audio CD; you would be adding unnecessary compression to the audio, which would degrade the sound when you make the CD. unless i misunderstood you and you want to create an mp3 data CD of your material. maybe you can give more details.
as for recording software, a question i should ask is what OS are you using, 9 or X? ProTools Free (OS 9) is pretty good for audio recording, if not overkill for what you want to do. Spark ME (also free) for OS X is also pretty good.
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