Assuming GG stands for Good Game does this item only activate after the round ends to when the replay is skipped, if so; how come when I tested this item I never heard a start or end point and it just kept playing throughout my matches?

gg.wav is the name of a .wav file there is no such item as far as I know. If you got the music item or whatever the name is , this only allows you to play music in.game like a music player but you will be the only one hearing it.

You probably want either a kiai sound item or a win sound item :

Kiai sound lets you upload sound files shorter than 5s and it is played when the fight starts.

Win sound is similar but as the name says it only works when you win. These items only work in online games, not in singleplayer.