Music doesn't work for either of you? Weird...
I've never heard of your error. A few possible solutions come to mind:
1. Try starting a new project, see if the music works in there.
2. Make sure you're importing the music through the import feature. This way you're only getting music in forms acceptable by 2k3: .MID, .MP3, .WAV
Likely you've already done the above, so what I suggest is redownloading it, maybe from a different site even, unless there is anymore info you can give us, or someone else happens to know the problem.
Nightwolf, make sure the MIDI volume in your Windows Volume control isn't turned down all the way. It might be called Synth as well.