No you cant. In order to do this your xbox would need to run the game and another to play the music. Modded or not the Xbox can't do this.
Yeah thats kinda what I thought, but some games do have custom soundtracks (amped,tony hawk 2x, etc.) Thats the only alternative.
Yes that you can do. You need to put the music in one of the Udata or Tdata folders in E drive. I dont remember the number of the folder.