One other thing: Have you got the event correctly set out? (Layer 2 Event) so that it shows the event step by step. If it doesn't, and he can't move, edit the level direction to where he should go next. Hope this helps.
It took me quite a while to get it all fixed myself, what you would need to do is change the midi into MML using tinymm, and NOT MIDI2MML. Change a few things, flip octaves, delete the boxes, and then add loops to make the song shorter. Then when you are done, save it as e.g. "23.txt".
Bust a Move has always been a good game. But I must say though, you have done well to find this out yourself, quite phenomenal. I gotta try this out myself, because I don't like playing as the same character all the time. Very well done, NES Boy.
As SuperYoshi has mentioned how to do it in ZSNES, I will show you how to do it in SNES9x.
1. Any level which has custom music on, go onto that level.
2. Goto File -> Save SPC Data. The file should be a certificate file, 65kb, under the name (Name of game).000
3. Play in an SPC player, there you go.
@SuperYoshi: I saved the SPC data halfway into the song, no notes were cut out at all, and worked fine.
One important thing: always TEST and RETEST. Check to see if your levels work out fine, with no problems. If there are glitches, get the glitches sorted. Don't make a level that is virtually impossible, or anything which is far too basic.
If he doesn't want any lives, it could become tricky. Have at least 1 life so that the continue screen doesn't keep popping up. Try and make it so you can't earn any 1-ups from collecting 1-up mushrooms, 100 coins or 3-up moons.