did you use a bed to rest?
The quest sshould continue when you rest on a ben in Mournhold, or enter the sewers. Let me know.
about the sound, download again the mod from here
http://planetelderscrolls.gamespy.com/fms/Download.php?id=102278
copy the folder "sound" in your "Data Files" folder, and replace the old files.
The sound problem is fixed by now.
I have slept mostly on the portable bedroll from Necessities of Morrowind, but also in the Winged Guar. And I've been in the sewers for what felt like an eternity since I forgot were Holger the Bloody was.
Maybe it's an incompability with Necessities of Morrowind. I'll try a new savegame without NOM activated and tell you what happens.
PS: Btw I'm using: Both Patches (1.2.2 and 1.6.3), Morrowind Comes Alive, Children of Morrowind, Necessities of Morrowind, Vampiric Embrace - Hunger - Realism, the hole Less Generic NPC stuff, Regional known criminals, Morrowinds Stupidest Criminals, Go to Jail, Your Big Mod ^^, Dracandros Voice, Give your orders, the Balance stuff by Wakim, Romance, Scripted Spells, Passive Healthy Wildlife, Less Lore and some graphic anhancement. Leaves enough room for conflicts ...