Based on interviews, Lucas Arts were using common MIDI tools and composition software. The real magic happens in their music driver, which takes the sound effe

Based on interviews, Lucas Arts were using common MIDI tools and composition software. The real magic happens in their music driver, which takes the sound effects, multi-track MIDI music, along with track priority infomation and dynamically down-mixes it to however many tracks the current audio device has. Just one in the case of the PC speaker. I assume they would have had a setup that allowed them to quickly hear what the track sounded like on all their target audio devices.