I had that problem once.....but it was because of a bad install. The install went to something like 95% and stopped....push enter a few dozen times and it droped to Desktop. Ran the game....oh....wait a sec. It didn't give me a wrong disk error, it just crashed. So I guess that's not the problem.
But reinstall anyway.
It sounds like a bad disk to me, though.
Is the Cdrom winding up? and making funny noises, clicks and stuff. That usually means that it can't read the disk.
You say you have a CDRW? well uninstall and reinstall with the CDRW. The game only runs off the CDrom (really the Drive letter) that you installed from. Some CDroms read bad disks better than others.
The mislabeling thing was with FF7 Platium.
FF8 doesn't look good unless your using the old 6.50 drivers, and the patch. Think you get grid lines and funny colors with anything else. But you say your inexperienced? I don't know....downgrading Detonator Drivers isn't, easy. Never used ME, so it may even be impossible, but I doubt it.
Guess you can try the patch, it's just a new FF8 executable file, just download the right one. One is non Geforce, the other is Geforce only.