What is MP3?
 
 MP3 is a type of compression for audio data.  It can achieve a ratio of up to 10:1 without a recognizable loss in audio quality.  This allows full high quality songs to be distrubatable over the internet.

One of the best sites  that I know of , Public Demand, has a great selection of recent indian songs in MP3 format.

There are several programs you can use, but the best is Winamp.  You can make playlists, scroll song title and there and some interesting plugins for it as well.

First get Audiograbber here.  This program allows you to "rip" a track off of an audio CD digitally and create an MP3 of it all at once.   But depending on your system, it may take a while to do.
 

Most likely, the MP3 was made from a wav file that was recorded from a cassette or any other method than directly "ripping" off a CD.  Public Demand's MP3's are all encoded from the original CD's.

I forgot to previously mention that you must have an MP3 compression utility installed on your computer before you can make an MP3. Get one here.