Attack the goblin when you get within range, then Data Drain the sucker for a goblin item. The first item is usually the GOBLIN CAP. While individually weak, these items are marked rare for a reason.
When you acquire all five Goblin items, equip the goblin gear and you can use the Imp Pin to summon goblins to fight with your party.
Read the email from Bandai after completing the game for the Mummy Ship location. Go there to fight another Boss. Data drain the Boss to get a rare weapon for Kite.
Check the BBS to find the final Goblin location. Go there to fight and defeat the Goblin. Wear all the other Goblin items and you will be able to summon a Yellow Goblin in battle.