So there is a password from part 2 to go to the loop of part 1?
I'm also confused. I thought R-Type I (pce) was the first three or four stages and R-Type II (pce) was the remainder of the game. R-Type for the TG is just R-Type I and II (pce) in one, or what you would call the actual arcade game. I think Desmond and Rags are talking about two different things.
You are seeing it right. JPN PCE R-Type 1 & 2 = Arcade R-Type splitted into two hueys (level 1~4 and 5~8). Since you will allways have a different amount of score and probably also different weapons when reaching the end of huey 1 (level4), it will give you a password, which you then can put into huey 2 (level 5 ~) and allows you to continue with the same score and weaponry.
nothing more to say about.