After a DAY of research, I finally figured it out.
For a while, some may have just been putting in regular PCM wave files for their music packs. While it does work SOMETIMES, there's two core problems with this:
1. Your file size is huge. That's kinda bad, nobody likes that.
2. It's the improper codec, so Freelancer might not read it properly (early loops, not even playing).
"But wait, the files are already in .wav format!"
Not exactly. You see, Freelancer's audio files have the .wav extension, yes...but they are encoded in Fraunhofer's MPEG2 Layer-3 (mp3) format. This sounds weird, but this game was made back in Windows 98/XP days, so it might not have been weird in those days. In fact, we can reproduce this format ourselves using an old Windows XP program. So, if you want to get the BEST format for your FL soundtrack, here's how you do it.
NOTE: I haven't tested this on Mac or Linux yet, so I don't know how you will do.
Step One
Find a sound track of your choice, and make sure it is a PCM-16-bit .wav file with a rate of at least 44,100 Hz.
Step Two
You need to make sure the Fraunhofer IIS MPEG codec is enabled on your computer. Windows 8.1 and below SHOULD have it enabled by default, but Windows 10 has it disabled. You can enable it with this CMD file.You might have to rename it from a .txt file to a .cmd file. Also, make sure you run it in administrator mode!
Note: I used these files myself and can confirm they are safe. If you still aren't sure, wait for a Discovery admin to confirm the files, or run it in a VM/Sandbox.
Step Three
If you are on Windows XP, launch the "Windows Sound Recorder" program. If you don't have that, you need to download it. It can run completely on it's own, but you need to run it as administrator, and run it in compatibility mode for Windows XP SP3.
Why use Windows Sound Recorder? Why not use (X PROGRAM HERE)?
True that other programs can perform the same operations, but some might be paid for, or don't function as well. Freelancer is a Microsoft product, so is Windows Sound Recorder; it GUARANTEES compatibility. For Windows users, Sound Recorder seems like the best option to me.
Step Four
Click file, open, then navigate to your .wav file you made earlier. Select it, and open it.
Step Five
Now for the conversion, click "Save As", and make sure it says .wav for the format. DO NOT SAVE IT YET!
Click the "change" button on the "format" line.
For the format drop down box, choose "MPEG Layer-3".
For the attributes box, choose "128 kBit/s, 44,100 Hz Stereo" option.
Optional: If you want to save this format for future use, click the Save As near the [untitled] box. Enter the name of the format, and save it. Now you can select that in the box that normally says [untitled] to easily select your options again.
Click OK.
Save your file.
Step Six
Your file is now in Freelancer format! Simply replace the original file, and test it in-game.
Step Seven
Repeat until you have your music pack ready to go.
Extra Notes
Freelancer, for some reason, reduces volume of it's soundtracks. Even if you're on max volume in the options menu, the track won't really play at "full-volume". This may force you to amplify the volume yourself, which could cause audio clipping. There's no solution to this without editing .ini files (which isn't allowed), so you'll have to find a sweet-spot. If I wasn't clear enough or I didn't word it correctly, look at this thread on the third post Thank you for the pin!
