I do not have a VDIP on the bench to test any of this but looking at the data sheet and my old code yours should work. But I have not used the VMUSIC, so maybe there is some difference there?

One thing that might be causing trouble is not enough time from Opening the file and Reading it. You have read this?
http://www.picbasic.co.uk/forum/show...7605#post47605
See how Brian has the VDIP connected with a Flow pin and the WAIT LABELS in the code.

Do you have the hardware to connect the output of the VDIP monitor to a PC terminal? You will need an inverter chip(MAX232 type).
Would be a big help to you to see what the VDIP is doing.