is it not possible to do it in Arduino?
Given your (not very detailed) specs, I don't think so.
Maybe there is a simpler approach for it instead of making crpytographic libraries?
The making of the libraries is the smallest problem. The Arduino platform is not powerful enough for the needed calculations and for the memory needs.
And also we're planning to minimize the sound file to couple of seconds to minimize the size ( 100kB < size < 1MB )...
An MP3 of 1MB is more than a couple of seconds. But even for 100kB files (I share the view of justjed in the legal aspect of short clips) the Arduino is underpowered. For one reason: it cannot decrypt such an amount in real time or almost real time. For a second reason: it hasn't enough RAM to store the result. An Arduino UNO has 2kB of RAM, most of which would probably be used by your decryption sketch. Where do you plan to store the resulting unencrypted MP3?
The usual MP3 shields read their data directly from the SD card. If you hack that interface you may be able to decrypt your music on the SD card but then again you have decrypted music on the SD card and nobody will keep your users from using that otherwise.
Let's say you include two SD card readers and equip the MP3 reader's card yourself. With a hardware hack to get access to that card from the Arduino too (disabling the reader's access), you may be able to get a system that's able to give YOU the imagination of having a secure device. I'd guess you cannot avoid that any clever user of that device will get to the unsecured music.
For such a kind of device the Arduino is definitely the wrong platform, my humble opinion.