So I found out it's not the room with all the games, it's the room where they sell food in the roundhouse. They have pho and stuff there.
DDR machine kinda sucks though, bad arrows.
Everything is scaled to your level. FFVIII was my first FF too, heh.
I beat the game with a level 37 (highest) Squall and a level 18 (lowest) Selphie. That was without a memory card. I had a Lionheart at the first disc though, using the card game thing. I had to restart all over around 3 times...