kszanz,
This is from the Quandary review:
It all comes on six disks and there is no hassle with disk swapping as each exchange comes at the end of a section of play. I am not really familiar with the game (been ages ago).
What happens when you use the next CD?
Maybe there is another step you need to do - have you checked other walkthroughs?
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I checked
Fugazi's wt and it did state:
Now pour this over the Capricorn head and free Mei. End op episode one, so far, so good!
So Episode 2 is next - change CD and it should work then.