Um, you should probably watch the movie DVD that comes with the Australian version of Xenosaga II. It composes all the cutscenes from Xenosaga I and explains things well enough to understand the second.
You have to spend CP to get into Class A, B, C, etc. of each level starting with level 1. Then you can use skill points to learn abilities.
Also try to work out how to do Air and Down combos -- they were a great deal of help and I only managed to find out about them in the last few battles.
(Basically KOS-MOS and Jin can set up Air. Ziggy and chaos can set up Down. But you need to be able to break the enemy first! Which took me ages to figure out -- it has to do with a certain combonation of attacks and depends on what combonation the enemies break is)
Also remember you can move your characters around in battle, meaning you can go behind the enemy to make things easier with bonus damage from back attacks. Very usefull if you set up Air and use Jr. and Momo to attack their full stock (and boost) from behind for teh massive damagez!
Edit: (SPOILER) Just wait until you see the fight scene with Jin and Margulis, some pretty awesome sword fighting -- but you knew it was going to come along from seeing them in the opening!
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