Salem

Just a quick question: What happens to a personal (marked green) key that resides in your inventory if you get KO-ed?

I take it all keys on a keychain (that can be equipped in your Equipment and carries its own slot) stays with you.

Your key will stay on keychain after KO, but player will theft could take it, but he couldn't use it.

Can't the player who stole it use it on another player, on his alt or something so it turns green?

Well slave keys have to be attuned to your character. So therefore noone but your chracter can use it.

You can use a red master key to make a green slave key, so you shouldn't walk around with master keys.