This is my way of searching for Keywords:
You want to look for keywords that have at least 2,500 global hits per month.
Type this keyword or keyword phrase into Google with quotes around it and get the search results. The rule of thumb is to stay below 200,000 competing web pages for your niche phrase. The lower this number is and the higher the global search number is the better.
Next, you want to know what the competitions PR numbers are and the number of back links they have. A PR 4 is not impossible to beat. It is PR 5 and above that I start to get concerned. Any amount of links below 100,000 you could probably manage to beat out over time.
So, this is how I do mine, is there a better way?
Also, how do I find (in simple terms) the KEI? Is there a way to do all this without buying expensive software?
I do all my research with Google Keyword tool.