Hi Lindsay, and welcome to GameBoomers!
When I played this one, I had trouble in exactly the same place, because I hadn't looked through the peephole with each one of the medallions (I only looked through one to see what the peephole was all about.)
Here are some more tips for things you might have missed:
If you come to the part where you should get a highlighted cursor and can't maybe you missed something. Here are a few common things missed:
Did you read the book about Marie Antoinette on the table near the spiral staircase in the library? Did you give Prof. Hotchkiss the diary you found in the tower and ask her to translate it. Did you later read the translation and also the coder page? The coder is to the left of the typewriter. When you look at the decoder Nancy will say, "Purple Rose holds diamond key of Queen!"
When you looked through the peep hole, did you look through with each of the medallions? Do you have the medallions in the proper order? Red left, blue right and green below.