You should probably read this thread for pin connections, Native PS/2 mouse implementation for 386/486 boards using the keyboard controller
For keyboard DIN to mini-DIN, there's a table of pins here, http://www.instructables.com/id/Old-Keyboard- … -PS2-converter/
Yes, the TAG for 1024K cache is usually 64kx8, which is DIP-32 with "512" written on the top. Jumpers must be set accordingly though. If the motherboard doesn't support 1024K, you'll need to do some soldering for TAG A16, and maybe others.
Any reason you want to use machine pin DIP-40 sockets? The make ends of your KBC aren't round, are they?
I'm not sure about modifying a Phoenix BIOS for PS/2 mouse support. Its possible that it is already built-in. Alternately, perhaps the TSR program provided in the first noted thread will work.