Flying over Midgar will bring you into the final sequence of this disc, so take care of anything you want first. When you think you're ready, fly the Highwind over the city itself. Your party will parachute in. Then, you'll have to go through a few mazes to get where your going. The first maze is relatively easy to follow, and the chests will give you the following: Elixer x2, Megalixer, Aegis Armlet, Starlight Phone, and Max Ray. Get them all, save and heal up, and continue into the tunnels.
If you immediately start heading north in the tunnels, you'll meet up with the Turks one last time. You'll get the chance to avoid fighting them if you want, but they're here, and you're here, so why not? Besides, this is your only chance to see Elena in battle, and you can steal some great items from them. Rude has yet another Ziedrich, Reno has another Touph Ring, and Elena has the second Minerva Band. The three of them together might be a little tough to beat, but with some summon spells, Ultima, and attack spells, you should win fairly easily.
Going north will get you where you have to go to move the story along, but going south will get you some good treasure. The journey is fairly long though. Just keep going south, ad don't get discouraged. As you near the end, you'll start to get source items in treasure cheasts, and eventually you'll hit a dead-end. There'll be a save point and the W-Item materia there. You can also stay here a while and fight, becuase the enemies that frequent thi place all give off Turbo Ethers when killed. You can get quite a few of them in a short amount of time. If you feel it's worth the trip, do it. If not, no sweat--you can always excavate W-Item, along with lots of other interesting things, in Disc 3 at the Bone Village. Now go all the way back the way you came, because thats where the sister ray is.
You can also go back to Shinra HQ if you'd like. In the first screen after the place where you met the Turks, take the right-hand fork. Keep going, and at the next fork in the road, go left. Up the ladder lies Shinra HQ, where you can get a few interesting things you couldn't before. In the Accessories Shop on the second floor, you can get those two chests that you couldn't open before, but the weapons you get for Tifa and Barret aren't that great. If you go up to Floor 59 and take the stairs down a ways, you should run across Red XIII's Behemoth Claw on a landing, but it only appears if you took the stairs up the first time you were here so long ago. Now, I noticed that if you take the stairs up instead of the elevator (now, not before in Disc 1), the Claw won't show up until you get to the top and go back down again. So, maybe if you go up via elevator first and then go down by the stairs, it will be there. If not, go back up the stairs until you see it (it's kinda hard to see--in one of those silver bags on the landing of floor thirty or so). Also in Shinra HQ is Cid's Glow Lance (F63), and Cait Sith's best weapon, the HP Shout (F64, in one of the lockers).
When you're finally ready to go to Sister Ray, go back to the first fork in the screen right after the place where you fought the Turks. This time go left, and you're going the right way. Be prepared for a boss, though, because Scarlet and Heidegger are waiting for you, and they've brought a friend with them--the Proud Clod. This one isn't hard in terms of fighting power (except when he falls down to his knees; watch out when he does this), but this fight can be a very long one, as Proud Clod has 60,000 HP and his armor has 20,000. Concentrate on him, not his armor, unless you plan on using a lot of magic, as the armor protects him from magic. Knights of the Round can actually take him out in one casting if your magic power is high.
Go use the save point, grab the free Mystile and elixer, and put Barret in your party, because as you go up the stairs, you'll find a chest that won't appear unless he's in your party. It contains the Missing Score, his ultimate weapon. Of course, if you don't want to fight the next boss with Barret around, just go back downstairs and change party members again.
Finally, you have to fight Hojo. This battle is fought in three consecutive battles, each with a different form of the mutated scientist. Make sure you have all the ribbons you can get equipped, and anybody without ribbons should have at least has a Poison Ring or something to protect them from his attacks.
First thing, cast Big Guard. The effect will last throughout all three battles. In the first battle, concentrate on Hojo instead of his allies. Don't worry about attacking his limbs in the next form, either. The final form is tough because of the fact that he can deal lots of damage, and his Combo will leave unprotected characters full of several nasty conditions. Resist and Esuna might be useful to have here. When it's all over with, you'll recieve a Power Source. Now you have to go through a few long scenes (got a lot of love points with Tifa? The amount you have will dictate how embarrassed she'll be when she gets back on the Highwind . . you'll see what I'm talking about when you get there), and after all that, you'll get to switch over to Disc 3.