MIDI Xilophone (over serial) to Ableton

Any extras you add are going to increase the latency because the code has to look at them as well. Anyway you can pile on the extras until it gets too much.

With the LEDs the simplest from a programming point of view is to add a shift register:-
http://www.elcojacobs.com/shiftpwm/

add also 4 knobs

Yes adding an extra multiplexer will do this.

to add 4 buttons

You should have some spare pins left on the arduino.