When I run the installer, the Squirrel Tool does not see the CD-Drive.
It's been a lot of years since I sold my squirrel scsi (which I wish I hadn't done, btw.) But if memory serves me correctly, the squirrel tool was about useless, so I wouldn't put much faith into what it says. I think I used to use a version of HDToolBox with the scsi.device line replaced with squirrelscsi.device for listing info.
I am using the cd.device for CD0.
I think you just stated your own problem. Try replacing that line with 'squirrelscsi.device'. I think the cd.device was part of a CD32 emulation program that was a right pain in the butt, never did work very well, and conflicted with OS 3.5 and above.
The squirrel SCSI is great, but you have to fly by the seat of your pants a bit with the software and drivers. Tinker around a bit more. Your configuration should work.