it seems that mirc doesn't look for .mp3 files in the sounds folder anymore but just .wav files
any ideas?


Yes. mIRC assumes that (and I don't know why) any file name with spaces is a wav file unless you use inverted commas in the /sound command.

EG:
/sound "Mark Latham will never be PM.mp3" will play as an MP3 file (or should)
/sound Mark Latham will never be PM.mp3 will try to play as 'Mark.wav'