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while digging around Daggerfall's files i discovered Dagger.SND at about 2minutes and 39seconds at 25% speed there are a TON of unused sound effects after this time

Mostly of people talking as if it was supposed to be background noise

a man grumbling and messing with things

people eatting

people laughing

at one point somewhere well before this i can hear the DOOMGUY Grunt from doom... (2M28.754s)
theres quite a few unused sounds in this file.
it seems they put all the sound into one file and just had the game play certain segments.

to play any of these you have to import it as RAW audio to something like Audacity and then the play-at-speed button set to 25% (else its sped up) (warning VENGENCE is ear rape)

is there anyway we could mod some of this into the game to make background noise in cities, taverns, etc?

Oh yes, I remember these too (I dug in DAGGER.SND in vain hopes to fix the problem with distorted sound in dungeons).

I think the only way to make use of these is to either hack the executable (provided that the code to play them is in it but disabled for some reason/oversight) or hope that any of the game recreation projects eventually adds the feature to use those.

Fun fact, this isn't unique to Daggerfall. Todd Howard used a test NPC in Oblivion that he recorded some dialogue for, which I think is pretty funny. He sounds so silly!