I feel like I installed this incorrectly but I don't see how.

What happens is, town music doesnt start unless I play it manually, and region music only plays when I initially load the game. For example, if I load a save in Azura's coast, Azura's coast music will play the entire time even if i travel to the west gash. Again, can only be fixed if I play the new region music manually. Combat music works just fine.

Anyone who used this mod able to help me figure out the problem?

I don't use it but I did put load ordering information into http://www.nexusmods.com/morrowind/mods/43001/ about it. Are you using the latest version of that (0.60)? A rejiggle of your load order by mlox may help.

I'm not using mlox. I suppose I can try it out but the mod history page and the readme don't mention it being required. Couldn't I manually change the load order via the nexus mod manager?

I have no idea about NMM.

As to using mlox. What have you got to lose? It may well point out a few things in your installed mods you weren't aware of. It does seem to http://www.tamriel-rebuilt.org/forum/viewtopic.php?p=325033#325033:
But then I'm biased.

Used mlox to sort my load order. Still has the same problem.