First: The "right" response is either buying a decent KID introductory book, or stop playing it.

Second: Your idea of 7...Ne8 and a quick ...f5 is simply naive: you are not paying the sightest attention to your opponents play. His 8.Be2 is an OK move, but 8.h4! is probably the right way to take advantage. In any case, after 8.Be2 f5? 9.ef5 gf5 10.Nh5 white has the advantage, but after the much stronger 10.f4! Black is already positionally busted.

You rightly feel that after 10...Bh8 11.Bh6 Rf7 12.0-0 the only one who has an attack is white.

12.h4? does not make sense- white could (and should) block Black's remaining bishop by 12.f4! and have a large advantage. You should of course reply with 12...f4! yourself.

Your 12...Nf6?! should be met by 13.Bg5, when white gains the e4 square in case of a ...f5-f4 push.

You wrongly feel around move 17 that you either play actively, or "you get rolled". White has played terribly the last few moves, and has very poor development, and no real threats.Trading your excellent knight on d4 for a  piece of wood on e2 is already a very bad idea, and after Nxd5, it just loses.

However, why not 17...Nxd5 immediately? It looks quite interesting, and surely enough black has several other good moves.

Black has next to nothing to show for his piece after 21.Qe4 or 21.Qe1.

Finally, you rightly feel that after 27.Rb1 black is as good as lost.

Gallagher's "Starting Out" series book on Everyman Press is a good startup book.

http://www.amazon.com/Starting-Out-Kings-Indian-Everyman/dp/1857442342/ref=pd_bxgy_b_text_b

But the really essential reading is this one:

http://www.amazon.com/Mastering-Kings-Indian-Defense-Batsford/dp/0020306210

There is no theory inside, but you cannot go without understanding its content thoroughly.