1) I want a video to loop while a longer soundtrack continues to play in the background (about 3 times the duration of one video loop). Is the only solution to make my video loop fit the timing of the audio exactly?
2) When they click on a button which goes to another menu (i.e. view more chapters)- I want the music and motion to continue, not just start from the beginning. I'm sure this is possible... any hints? :)
2) That's not possible in the DVD-Video specification. Not even Hollywood can do that with standard definition DVDs. You have to get creative with the video and audio to fool your audience. The menu system for Lemony Snicket's A Series of Unfortunate Events is an outstanding example of the this technique.