Do you have the ASUS ASV1 codec installed? It's been known to trigger crashes in Windows NT and XP.

Here's a link to the unofficial VDub support forums:

http://forums.virtualdub.org/

You can contact VDub's creator (phaeron) from there, file bug reports, or search the forums to see if anyone has already reported similar problems.

And in answer to your other question, no, I don't believe there's a way to automatically loop the audio track within VirtualDub itself. You'll have to loop the audio file manually with a sound-editing utility, and then add it to the video.