Episode 2, BS5 icon in my account disappeared yesterday and the original icon was marked update. Downloaded the new 6.6 GB as directed, but do not know if episode 2 is actually a part of the new download and , if so, how to find the second episode in the new download. Is episode 2 actually part of the game now, and if so, how do I find it? And play it? do I need to start the game over from the beginning? Help!!

Broken Sword 5 is no longer separated in episodes, it's now a full game, the new installer is for The Serpent's Curse standalone (eps. 1+2). Yes, you'll have to play through episode 1 entirely to get to episode 2, as it's just the continuation of the game. Old saves work, there is a user in here who shared his saves at the end of episode 1 so that people wouldn't have to go through the first part again.

[EDIT] Here are the save files Tellur kindly made available:

https://www.dropbox.com/s/624caltzmoatsxt/Broken%20Sword%205.zip

Place them in My Documents -> Broken Sword 5 (if you're using Windows). I hope this helps!

On OS X, the same folder can be found here: ~/Library/Application Support/Broken Sword 5

Thanks for linking the saved games!