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Can you take a Legion of the Damned kill team?

What makes think you can not?

They are an Elite slot, so as long as you can still take an Elite choice I don't see why not.

"They always start the game in reserve and always arrive by Deep Strike." You can't do that in a Kill Team mission.

The Kill Team rule covers what happens in this case.
It's under "deployment".

I was in a kill team tourney a couple of months ago and a fellow brought a legion of the damned force.

It did not do well for him. I think he got wrecked in all the games. Everyone else, except for Tyranids seemed to bring max models possible while the LOD guy focused all his points in a few models, and he just couldn't keep up with the weight of fire.

Quantity typically wins in KT over quality.

Latest Kill Team Rules can be found here:
http://www.games-workshop.com/MEDIA_CustomProductCatalog/m3460063a_Kill_Team_Rules_Pack_2013.4.pdf

Quantity of shots seems to do really well also. I tried out a 5 man Tau Stealth Suit squad with one Gun Drone. Gave one a fusion blaster, gave all of em Advanced Targeting Systems, took Preferred Enemy, Move Through Cover and Fearless. Was precision shot sniping Specialists all over the place.