The wooden disk is a quest item used in The Fremennik Trials quest during Peer the Seer's part of the quest. It is found upstairs in his house, and is turned into a red disk by using some sticky red goop melted off of a red herring also found there.
The red disk is used on an abstract mural downstairs along with another old red disk in order to obtain a vase lid needed to complete Peer's challenge.
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