Did you select "desktop system" when you installed cd 1? Try editing this file:
# gedit /etc/apt/sources.lst
Remove any references to cd's or dvd's. The file should look like this:
deb
http://http.us.debian.org/debian/ etch main contrib
deb
http://security.debian.org/ etch/updates main contrib
Save the file and run # apt-get update. Then try installing KDE.