I've scraped a file and sandpaper to a knife for about 5 minutes and gave the hell up. Horribly tedious and frustrating. That was my driving force to get a real grinder and real tools. Get a nice grinder with a glass platen, and you'll probably not ever look at a file again.
Kind of like my advice to people starting to play the guitar. The reason people give up is because they got the Sears kiddie rig that wont stay in tune, and the action is a mile off the fretboard. Start out with a little Fender, and it's a whole new ballgame. Good tools provide instant gratification and results, which in turn grows encouragement and confidence.
I got great results right away starting with belt grinders, and the Craftsman is OK if you're careful, and plan on making some very simple knives. Get some good quality belts, and a pyroceramic glass platen. I got mine from Ellis refractory, but they are no longer around. Shop/look/ask around. Maybe a local fireplace manufacturer can cut you a 2in oblong piece of this material.
Go ahead and use a quality known steel. Ditch the welding/mild stuff. You just may grind an awesome blade out, and it would be a shame if it weren't real steel. It's not much more expensive anyway.