I'd guess Doug is on the right track. There are, of course, MIDI programs that will do exactly what you want (even some shareware, I think).
I have, at the moment, one guitar fitted with the RMC Acoustic Gold hexaphonic pickups that produces MIDI output and am planning on adding this capability to an electric in the near future. Because the strings sit right on these individual piezo pickups, they actually track pretty well, but it helps to have an outboard synth to process the signal and tweak the input sensitivity settings. RMC link here:
http://www.rmcpickup.com/
The least expensive hardware option for you to retrofit an existing acoustic (or electric) guitar might well be a used Roland GK-2 or GK-3 pickup, which can typically be found on eBay for $100 to $150 typically. New they run around $230 or so.
Also, some guitars come with MIDI pickups already installed, notably the Godin Multiac (which uses RMCs, btw), along with various others.
I don't have any useful info on audio-to-MIDI conversion, so perhaps someone else will chime in on that.
Hope that helps.