I'm sorry...but...did they just cram the entire disc, box and all, inside the machine? I don't own that particular machine/model...but I am 99% sure that was not correct...
No, apparently, the CED worked like that. Inside was a high density vinyl record that was read by a needle just like a regular record. The disc was protected by that sleeve so it wouldn't get scratched since the grooves were much smaller and the data was more compact.