I've finished all the quests but the main. In the main quest I've just talked all the other towns into sending troops to help out in that town (forget the name) in the north...this by closing the gates closest to them.

So far there has been no mention or evidence of Shivering Isles. Is it a completely unattached game on the other disk? I hope not...I don't want to have to start over when I go there.

Put in the other disc and install it... Shivering Isles is an expansion pack that needs to be installed to the Hard Drive.

Once it's installed and you go back into the game you will get a message after 24 in-game-hours about the Shivering Isles as well as a new location on your map.