You use ARTS??? But Why???
There's DMIX which does the same WITHOUT needing to run such a resource misuse piece like SOUND SERVER!
My advice:
Disable ARTS,
set up ALSA to use DMIX as a default output plugin (see
http://alsa.opensrc.org)
set up KDE to play system sounds using aplay or mplayer (or whatever player you like, assuming it can use default alsa output and/or supports dmix and supports file format that your system sounds are - there can be some Ogg-Vorbis files among default system sounds on KDE which aplay doesn't handle correctly)
there you are!
now you can start timidity with timidity -aA and you'll hear both xmms (don't forget to setup it to use ALSA output)
and midi player;
there's also an oss wrapper script called aoss for applications that only support oss and block your sound card, but it doesn't work with all programs.