1. The formats that the games support are: 
   
   .OGG
   .WAV
   .MID
   and MOD formats. ( XM, MOD, S3m, etc.)
   
   

2. From the Main Menu, pick "Options" then "Audio".
   
   There's a tab at the top labeled "Folders", where you can add whatever folder you store your music in. 
   (Like C:\My Music or C:\Program Files\SilverCreekCommonFiles\Music)
   
   

3. The tab, "Music", lets you add any music found in those folders to your playlist.
   
   Once you add a folder that has files with the above extentions, then they will show up in the "Music Choices" box above the Playlist box.
   
   Once you see them in the Music Choice box, then you can double click on the music file to add it to the "Playlist" box.
   
   

4. If you want to play MP3 or CD audio, you will need to use an external media player (like Windows Media Player or MusicMatch Jukebox) . Then just turn off the music in the game. 
   
   

5. You can still play sound effects and environments with the music turned off
   The tab, "Volume", let's you choose what you want off or on, soft or loud. Just check or uncheck the boxes, and adjust the volume of each sound element with the sliders.

Thanks to Manny & Jonas for this information!

Helen Trevillion - fantastic original game MIDI's in the "2001" section. 
(her .mp3's are also terrific, but only the .mid's will play in HW games)

Bjorn Lynne- original fantasy MIDI's

Quest Studios - MIDI's from your favorite Sierra games, like King's Quest

Please be respectful of these resources - these are the original works of independent composers. Please follow all the rules composers have posted on their sites - Thanks!