I have a very short video clip of about 40 seconds that runs as a motion menu. I also have a separate song that i want to play in full over the menu.
Is it possible to loop the video so that IT loops when it come to the end of the 40 seconds, but the music keeps playing?
At the moment, when the video restarts so does the music

No, you can only have one loop point defined for a menu as a whole, not for individual resources in it.

Some options: You can set the menu duration so that it matches the audio clip, in which case the video background will play until it reaches its end, where it will freeze on the last frame. You could extend the video duration by slowing it down or adding more video to it, or you could change the duration of the audio by fading it out at the point the video ends.

i wanted to do something similar. i had to re-edit my video clip in my NLE so it became the length i wished (about 2 minutes of looping) then exported it and dropped it in encore.