Part of that is was probably just Windows 9x's terrible multitasking, coupled with a badly-written MP3 decoder. We generally suffered software in those days that really held back those machines from what thy were capable of. The MMX Pentiums were perfectly capable of decoding an MP3 in real time.

My old 233 MHz MMX Pentium machine could decode MPEG-4 standard definition video with an MP3 audio track, under Linux. Though I had to set my video player to real-time priority if I wanted it to not drop frames.

Unreal, Unreal Return to Napali, and Unreal Tournament used S3M files for music. Not CD Music