If you've run the Squirrel installer then it might have overwritten the proper driver with its own Squirrel-specific one.
Make sure that the CD0 mountlist in DEVS:Dosdrivers/ points to 1230scsi.device in the CD0.info and doesn't have a "device = " field in the actual mountlist. The icon should also have "UNIT = 6" or whatever the CD unit number is (check the jumpers on the rear of the drive and make sure it is NOT 7). Again, the mountlist shouldn't have a "unit = " field.