HUv1.7 has different synergies from HUv1.6. There's a design document in the HUv1.7 download if you're interested in the details, but it'd likely pretty boring reading and not related to getting you sound
. The gist of it is that if you get bored of v1.6 (tried all the builds and quests), then consider trying v1.7 (new builds, a couple different quests).
The .mpq files are just compressed files, just like .zip or .7z files you're probably used to. The only difference is that .mpq (I think this is short for mo-paq) is used by Blizzard. You'd need special software to open .mpq files, but once you do you'd see the folders and files within it. We're just trying to take the music folder out, and place it in a spot where Diablo is expecting to find it. PhrozenKeep is a website for Diablo modders, so they keep more information on modding tools like mpq software.
When starting a D2 mod using D2SE, there are checkboxes in the bottom right for "-direct" and "-txt". Using those will let D2 know that there is a "data" folder containing information for it. If you place the music folder in
<D2 folder>/mods/HUv1.6/data/global/<music folder>
You would have to make the "data" and "global" folders since they're probably not already there. Then when you start HUv1.6 it will play the music from HUv1.7 (this is the same music from HUv1.3, so HUv1.6 should already be configured to use it)
Since you've got all the files and are just missing the mpq software, you're pretty close to being able to get this done by yourself, but let me know at which step you get stuck on if things go that way.