Have you tried to get the disc resurfaced? That could solve it.

Whether you fix your copy or buy a new one, finish this game, you'll love it (hopefully). Try to avoid Xenosaga II, maybe play the first hours to understand that they fucked up, but the best way to experience it is second hand, read or watch a synopsis of it. Then sit back and enjoy the ride that Xenosaga III gives you, because holy crap that's a good underrated game.

Sadly the third one is a bunched up version of episodes III-VI and ends the story amazingly well for such a task. I would have loved to see the true series play out, but Monolith didn't have the funding for it...

Xenosaga 2 isn't that bad, it's just very, very hard to get into. The game is reasonably difficult but the issue isn't the difficulty it just feels kind of off, so if you do play it then just do it all in one go and take the plunge, don't try to play it over time; about 20ish hours in it'll start to click and feel better and the battle system will feel reasonably well developed/interesting; up to that point you just kind of have to deal with it. If you try to go back to it you'll have unlearned whatever it is that made it feel good and have to go through the process again.

As always since this is essentially the best voice acted story in games you shouldn't feel too bad about just watching all 3 games' cutscenes instead of playing them, that's not to say they aren't worth playing but maybe you only have 30 hours instead of 120+ to spare.

Xenosaga I is super cheap so I wouldn't worry too much about buying another copy if need be, Xenosaga 3 not so much.