Linux 2.6.31-22-generic [i686/630.64MHz]
Charset: UTF-8 Renderer: Pango
Compiled: Aug 6 2009
preferences>sounds shows ~/.xchat2/sounds as the default sound file folder
The main (only?) way to pick a sound file for an event is to preferences>sound>browse but the browser can't see the default sound file folder because its name starts with a period and is hidden as far as the file browser knows.
Nautilus (the ubuntu default file browser if that's what it's using) is set to to show hidden and backup files by default.