That's the same exact thing I'm wondering. I think there's a lot of other things in that town as well (I believe it's called Lei Chen or something) but there's like no way possible to get in there. I had the same problem back in the Netherrealm, where there was this guard that wouldn't let me pass a bridge. I never found out how to pass it, even though there probably is something you can unlock after it. I did find Li Mei in Orderrealm, but that was just to fight her, not to unlock her or get her alternate costume.

Patience is a virtue, you CANNOT get everything the first time through Konquest. you will need to beat it once and go back and then you will have access to all the area's. As far as Li Mei once you follow the story around and Kano captures you he takes you to that village and then you can get her.

Does he capture you thru missions or thru talking to people?

I went to the Living Forest after I helped Hotaru out but Kano is not there. Is there anuthing I'm missing or any certain place in the forest?

If you follow the story you cant miss him. Its part of the story. just forget about it untill it happens. Trying to get stuff before you beat the knoquest dosn't really work. Just beat it then worry about stuff.