It probably won't matter if you have it in a Bag of Holding, but it's worth taking it out just to make sure.
I always use it on one of the "lesser" machines in the same room, rather than the big machine. Try hovering your mouse near the wall between a couple of the sleeping captives, over one of the smaller machines & see if you get the "Use" symbol. If so, click it, & that should wake them up.
- Imrahil
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