Okay, I just tried this for myself. The command to expand the image is
chdman -extract kinst.chd kinst.img
HOWEVER: the emulator is looking for the correct version of the .img file, and the one in Mame isn't it. There's likely a way to 'convert' it, but I'm guessing it's more trouble than it's worth. By convert, I mean to make it a corrupt image, which IIRC the original was. The sectors, etc aren't in the right place, so if you use the Mame version, you'll get a blue screen, the voice says 'DANGER' and that's it.