Hi,
I think there is a bug with MIUI Music App. The player "plays" the music files but no sound is heared.
With PowerAmp FLAC files are played without any problem.
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Nexus One - MIUI-1.11.18
Last fixed FM.apk provided by @miuiandroid didn't solve FC problem in my N1, but anyway you should be able to install it in your device using the adb tool:
adb remount
adb push FM.apk /system/app