Important addendum:

Very sorry, I really meant to have included this extra information -

The problem stated in my original post above only occurs inside a Windows 9x "DOS Command Box".

(If you quit to "real DOS", everything works as it should do.)

Thank you. (I hope someone can test this please.)

well another thing is that shadow warriors' full version contains no MIDI audio - only cd, so their midi code was probably broken in the demo. No big deal.

I have a CT-3600 Awe32 (OMG BUT ITS SOUND BLASTER 32) but I can't put it in anything since my comp's isa slot is next to the cpu which has a fan etc.

I've done the same test but this time using an AWE64, and I get the same problem as I mentioned in my OP (and subsequent follow-up).

It's interesting that Vogons user "leileilol" mentioned that this game was commercially released without the midi music but with CD music instead. I wonder if Duke Nukem was also the same. If so, I wonder if 3DRealms realised their music code was broken in regards to PnP Creative cards inside a Win9x "dos box", and decided to scrap the midi music for CD music instead?

Nope, Duke3D was MIDI only, though the Atomic edition had a CD track of Grabbag (only one song)