For some reason, the MIDI sounds scratchy, and I can't fix it! I am running System 7.5.5 with an LCIII ROM in Basilisk II v.142 running under Windows XP SP2.
Hmmm. Easiest answer would be to install it on a real Mac and record it from there. I'm guessing this has something to do with interrupts and your soundcard and Basilisk all interacting badly.
I did get it running in SheepShaver, but the game freezes when I try to look at an item in 3D, thus I can't complete chapter 6, unless I can get it to work right on my actual PowerPC, and copy over a saved game with the wand already set.