Hi Will !

There are some bugs in your code:
1. Clear TI flag before sending each byte
2. Start Timer1 once in the initialisation not in the loop

The initialisation is ok.
***
init_serial:
MOV SCON,#40h ; 8bit UART
MOV TMOD,#20h ; Timer1 8bit auto reload
MOV TH1,#0FFh ; reload value for 31,25 kHz
SETB TR1 ; start Timer1
***

A routine which sends the byte in the accu:
***
send_MIDI_byte:
JNB TI,$ ; wait until transmitter ready
CLR TI ; clear flag
MOV SBUF,#A ; send byte
ret
***

"txloop" is obsolete.

You should connect any keyboard/synthi/expander an use a simple key on / key off command for testing. You can hear if it's working.