first the lingo: closed(isolating)=keeps outside sounds out and keeps your music in. Open(non-isolating)=music leaks out and environmental sounds get in.
that said, if you want isolation, you aren't going to find it in clip-ons. By their very nature clip-ons let sound in, which can be an advantage or a disadvantage it's up to how you use them.
the advantages of earbuds are: you can get isolation if you want it (etys, sony EX70, aiwa VX100), you can get bass if you want it (EX70) and some of them sound quite good. I've never heard the MX500/400s, so i can't comment on them, but their wuite popular as well as cheap.
the disadvantages of earbuds are: fit is entirely dependant on your ear. The EX70s are probably a little better for this than most other low-cost buds because they come with three different sizes of gaskets to wear. Personally i've yet to find an earbud, which i can wear comfortably for extended periods, my ears just don't like them.
Advantages of clips are: they can be quite comfortable, even my least-comfortable clip-ons don't bother me much. You can get pretty good sound from them too although the character is different from earbuds since the sound comes from outside your ear rather than in it.
Disadvantages of clip-ons are: no isolation (if you want it) and not as many models available (in the us anyway)
Unfortunately i don't own the Koss KSC35, so i haven't been able to compare them to the clip-ons i own, but i should be getting a pair of portapros in a few weeks, so i should be able to give some decent impressions then.
hope this helps,