Does k-meleon support xpi files like in firefox where it installs itself when you click on the link?

No

any way that I can import firefox extensions into k-meleon

Only very rarely, as in the case of aggreg8 or flashblock.
This is so, because pages targeted by the xpi are not found,
as K-Meleon is not entirely written in xul.
It could be possible if you would write your own xpi's,
that use only xul pages that are present in the K-Meleon chrome .

Fred

xpi can not be installed because most would install on wrong place.
xpi install is also not present for safty reasons!

So You must install ff extensions by hand
- and You must also create code that calls them.

Some extensions work - but those that need code from bookmark folder, that is called by editorNavigatorOverlay.xul or is from browser.jar do not work.

FF extensions use some chrome we do not have.
or use chrome at different location in FF chrome .

They need code that is not used (done bookmarls plugin), that does not exist or that is at another location - respectively.

p. s. (each mozilla version has slightly differnt chrome).
So some things could be edited to work - but again nobody do it for You.