Jim,
I just downloaded your zip file and extracted it. I opened the sequence in version 40 and changed it to a animation sequence, rendered it and it played just fine. I then added my White Christmas mp3 to it and it played fine again. Could there possibly be something with your audio file that xlights doesn't like? That's the only thing I can think of at this point. But rest assured I am no expert at this.
Good luck,
Ken