I figured it out!
To make any anamation work as an idle anamation, decompile the model and open up the qc file in note pad. Go to the anamation you want to loop and simply type loop after the fps. So you have for example:
$sequence "sitting2" "sitting2" fps 20 <u>loop</u>
Also the thing with the footsteps. To fix this open the qc file and look at the line where it has the walk anamation. At the end of it you will see this:
{ event 1004 <b>3</b> "common/npc_step3.wav" }
Change the number 3 to like 12 or something and that should fix the footsteps. I Think this number varies from model to model so you might have to try like 8 or 14 to get it right. Just play around with it.