There is a few collections of public domain (or just royalty free) medieval music. Most of it, however, I would recommend you use for when you visit a town, village, or traveling.
Most players want the music in a battle to be somewhat riveting, "epic" sounding, dramatic, etc. There is a good amount of public domain music that fits that bill, but does not necessarily sound very "medieval". The Stainless Steel mod team for Medieval 2 used quite a bit of this music for when fighting actually commenced in a game (when the soldiers were actively fighting, as the game could distinguish between nothing happening, armies marching, and actual combat).
Some links:
http://musopen.org/
http://www.jamendo.com/en/search?qs=q=medieval (<----Pointing out that this one however may be a bit iffy. Says you can download the free songs for private, personal use. They DO have songs that require some sort of fee, of which you would have to subscribe for, but still a lot of songs are royalty-free and thus free to download).
http://imslp.org/ <---has recordings and many times sheet music.
I also could have sworn there was a collection of public domain medieval music on http://www.tesnexus.com , because I saw it there before, downloaded it, liked it enough to also use it in morrowind... Can't find it there now.
If you wish I can continue to look for suitable music!