Battles tend to last long and the music just stops after a while, is there any way to get it to loop?

If you're talking about Betrayal at Krondor, probably not, unless you're willing to do some haxoring. See this old topic:

http://www.gog.com/en/forum/krondor_series/bak_redbook_audio_not_repeating

I haven't bothered myself, just switched to using a Soundfont togetether with my Creative X-Fi.

I believe the GoG version of BaK uses CD audio which can't loop. Using midi audio allows the game to loop music but you won't be able to listen to "The pigs of Northwarden" if you use midi music.