I wrote a a
couple of days ago about having tried out a new way of
converting MIDI files to lilypond. I posted the gist of the
idea to the lilypond
users’ mailing list, and got some more suggestions of things
to try.
The idea I liked best was that the MuseScore program has an
experimental Capella import (and
lilypond export),
which would have let me avoid using the MIDI files as an
exchange format at all. Unfortunately, in its current state,
the import crashes on the capella files for Holborne.
(I did report the bug on the MuseScore tracking program.)
So I tried several other programs that import MIDI and export
lilypond, and the one that seems to work best for this
particular purpose was the rosegarden one. I
haven’t finished a whole piece, but from what I’ve done, it
looks like the work I have to do is work I couldn’t reasonably
expect a MIDI reading program to do for me.
The most time-consuming part is that the MIDI files for the Holborne
are what lilypond calls “unfolded” repeats, and I want “volta”
repeats. That is, when something is repeated, these MIDI files
play it twice (which is what you want when you’re using the MIDI
file to practice with), whereas I want to print the music once with repeat
signs around it. But otherwise, I’m just making the changes
which are necessary because I want unbarred parts.
LayMusic.org 
You should export musicXml in Musescore and convert to lilypond using musicxml2ly. MIDI is not intended for notation.
At the time this post was written, I don’t think musicxml2ly was usable yet. In any case, nobody uses MIDI for notation if they can help it, but there’s still a lot of MIDI out there on the internet, and it would be good if it could be used. I did end up using the Capella -> musescore -> lilypond route, and it wasn’t problem-free, but I think it was faster and less error-prone than transcribing all the Holborne’s from dead tree form.