what kind of amplifier do you use? what type of mixer?
I personally use a USB sound card and love it. It's discontinued, but there are others out there that are similar in use and expense. Go to Musician's Friend and you'll see a variation of what I use...
http://www.musiciansfriend.com/product/ ... sku=702540
turns your output sound from your computer to RCA out. (in too, if you want to play with that... I have and it works... but that's not the discussion at hand.)
depending on the system you have for your laptop, the s-video out should suffice. You'd have to look at your operating system and see if you can go extended desktop, dual or some other such type of setting. Mostly, check to see if you have dual monitor support.
Then using Winamp with it's plugins, you can play the converted file on your pc and send the video to a 2nd monitor (tv), and the audio to your amplifier/mixer.
As for converting what you currently have on the E-500, I'm assuming you mean the NEO discs... I think Powerkaraoke has the ability to do this (but am only going by memory now... sorry), but now you're starting to go to expenses.
to convert existing CD+G discs, your laptop will also need a cd+g capable burner. Check the other threads on this particular forum, and you'll see other topics that relate to this.