Anyone know how to set up Yamagi?

The readme that comes with it is atrocious

I got it - so what the readme isn't clear on is that you need to download "Yamagi Quake II 6.00 for Windows" (if you're using windows) at the bottom of their downloads page, and then you need to download the other file marked " Yamagi Quake II Client Version 6.00".

Extract " Yamagi Quake II Client Version 6.00" to c:\quake2 , then extract "Yamagi Quake II 6.00 for Windows" to the same directory and run quake2.exe from c:\quake2.

The readme isn't very clear on the above procedure.

The readme file (which is inconveniently an ".md" file, for windows users) can be opened with wordpad.
No idea how to help people using other systems, sorry!

Has anyone else noticed a bug in Yamagi v6.00 for Windows where the mouse stops working if you press Escape to view the menu?

Yes it just happened to me... now how do you make Yamagi run the Quake 2 Expansions? also is there a way to improve texture quality? and by that I mean something to replace the texture themselves not just an aliasing method like the one included..

I had to revert back to v5 Yamagi since v6 didn't work.

To get the expansion packs to work, you need to create shortcuts to Yamagi's version of quake2.exe.
So the Target path should say:
quake2.exe +set game xatrix
quake2.exe +set game rogue

If the music doesn't work, make sure it's located in ...baseq2\music and try renaming the files to "02.ogg, 03.ogg" format.

than you kindly!