Well, I'm confused too. There's nothing special happening there, it's just a dialog.
So he asks 'which bookcase' and you can answer 'one', 'two' or 'three' and then he asks 'which shelf' and nothing happens? Do you see the 1, 2, 3, 4 options?
I found that some ags games only work on my system if I change the color depth of my monitor (but I didn't need to do that with Night and Day).
Did you try to change the driver with the winsetup.exe (instead of just changing to windowed mode)?
If everything fails I can send you a saved game from that part if you like.