Does loud music affect hearing and balance?
First off, there are many flavors of decibels, as it is a relative measure. For the sake of clarity I assume you are talking dB sound pressure level, or dB SPL, which is a unit of sound pressure relative to a standard sound pressure of 20 µPa and widely used. 


The damaging effects depend on the sound pressure received by the ear. Whether this is a compound signal or a single source doesn't matter. Like whether you crash your car against a wall at 80 mph, or head's on against a truck both travelling at 40 mph - it doesn't really matter. It's the mechanical energy transferred to the hair cells that counts.  
A one-shot noise... I don't really understand what you're aiming at, but as said above, it's the raw sound pressure that counts. Further, prolonged exposure is definitely more damaging than a short exposure. However, when the sound pressure is strong enough, e.g. a bomb blast which lasts just a fraction of a second, hearing can still be permanently lost provided the sound level is high enough.   
According to the Ear Center of Greensboro, a rule of thumb is that the maximal safe exposure to sound of 100 dB is half an hour, and for every added 5 dB that time is cut in half. Thus, for 120 db that would add up to 7.5 minutes before permanent damage occurs. The safe loudness limit per day has primarily been established in terms of maximum sound levels for occupational exposures (i.e., sound exposure for 5 days per week, 8 hours per day). Likely it is dependent on where you live, but here in Australia, the Government has set the safe occupational limit to 85 dBA. The dB(A) is a weighted unit of loudness that is corrected for the hearing sensitivity of the human ear. 
The labyrinth of the inner ear is a system of interconnected chambers and canals. The fluids in the cochlea (responsible for hearing) and vestibular system (responsible for balance) are indeed interconnected (fig. 1). 



Fig. 1. The ear (upper panel) and structures of the inner ear (lower panel). Source: Washington University. 

However, sounds enter the inner ear via the tympanic membrane that connects with low impedance to the cochlea, but there is no direct connection to the vestibular system. Hence, only very loud sounds may affect balance, but that are likely accompanied by mechanical blasts that will physically damage the delicate inner ear structures. Loud music of 120 dB will not damage the vestibulum.