Why does BAM music sound worse than MIDI music?
In the old DOS/QuickBasic version of the OHRRPGCE, BAM music was played out of the FM/Adlib/OPL2 chip in your soundcard. Many newer wavetable soundcards use poor quality FM/Adlib/OPL2 chips or lack FM/Adlib/OPL2 chips entirely because the manufacturer said "Hey, nobody uses that old stuff anymore, we can save a few bucks." Also, even soundcards that do support FM/Adlib/OPL2 seldom have drivers that support it on Windows XP.
MIDI music is usually played through a wavetable on modern computers, not using FM/Adlib/OPL2 at all. Wavetables can use high-quality sound samples, which is why MIDI sounds good. Because of DOS limitations, the OHRRPGCE was not able to use wavetables, so even if it supported MIDI, the MIDI would have been played through FM/Adlib/OPL2, and therefore it would have sounded just as bad.
In the current version of the OHRRPGCE for Windows and Linux, BAM music is converted into MIDI automatically.