OK, I got it to work (followed the images with actual RED and YELLOW cables attached) and it works.
So this is the picture that shows the correct connections?

Regarding the CD-drive, perhaps you could test the drive with a
MKE/Panasonic interface found in som really old PC-soundcard like
Sound Blaster Pro, CT1330,
Gravis Ultrasound MAX and Gravis Ultrasound CD3 soundcards ..?
And even better get an extra drive with
Panasonic/Sony/Mitsumi interface and see if the CD32 runs with it. Just remember it's neither IDE, P-ATA or SCSI-8.
Considering the age and use of the unit. It's no wonder that the mechanical side of things are broken. Getting an original (non-FPGA) Amiga to work is likely expensive buys + repairs. Knowhow doesn't hurt either. And some sellers just don't have the equipment to test these things.