[ddouglass]

They only go "bad" if you move them or the KMH files.
The reason for not importing any file that is already compressed (MP3, MP3+G, WMA, WMA+G, ZIP, any Video files, etc) is for two reasons. One is Hoster does not try to recompressed already compressed files. The second was to keep you from needing two large copies of those files on your computer (the original and a KMA version) thus saving space on the computer and allowing you to use those files in other programs too.
If you have moved the original files to a different location from the KMH file then Hoster will not be able to find them and will give you an error. Either put them back in the original location, or delete the KMH files and re-import from the new location.